Airline traffic growth is knocked off course by Eurozone worries

City A.M. Reporter
IAG, the parent firm of British Airways and Iberia, has been hit by Spain’s economic woes in the last month, undermining the strength in its long-haul London routes.

IAG said yesterday that its traffic, measured in revenue passenger kilometres, rose 6.6 per cent last month versus May 2011, while passenger load factor – a measure of how well it fills its planes – was up 0.5 percentage points at 78.6 per cent.

“Underlying market conditions at our London Heathrow hub continue to be firm, particularly in long haul premium,” the company said.

“However, commercial performance at our Madrid hub has deteriorated further due to the ongoing effects of the Spanish and wider Eurozone macroeconomic conditions and, the after-effects of prolonged industrial action.”

IAG said its first and business-class travel – the most profitable part of its passenger business – rose 1.7 per cent, while non-premium traffic was up 7.5 per cent. It added that trends in June appeared to be stronger than those in May.

Traffic at Iberia, which made an operating loss of €170m (£137m) in the first three months of the year fell 1.8 per cent last month, IAG said.

Meanwhile, capacity cuts at Air France-KLM contributed to a 0.2 per cent fall in passenger traffic in May.

The airline also blamed four extra public holidays in France for the slide. Its cargo revenues fell 8.8 per cent on a year ago, and are 7.3 per cent lower in the year to date.

And budget airline Ryanair said that while passenger numbers rose five per cent to 7.5m last month, thanks to expanding routes, its load factor dropped one percentage point to 81 per cent.