European carriers urge EU action to stem 2012 losses
he Assn. of European Airlines (AEA) predicts its member airlines will post a € 1 billion ($1.3 billion) to ?2 billion EBIT loss for 2012 and is urging European institutions and the EU's 27 member states to take concrete action to improve this outlook.
AEA's 2012 forecast follows IATA's forecast last week that European airlines will fall to a $4.4 billion loss in 2012 if governments fail to resolve the Eurozone sovereign debt crisis ATW Daily News, Dec. 8.
'There is one certainty for 2012: it will not be an easy ride for European airlines. The prospect of high external costs and depressed demand is not a good combination,'said AEA secretary general Ulrich Schulte-Strathaus, noting that even the negative outlook for Europe's network carriers 'is heavily dependent on a swift and effective political solution to the sovereign debt crisis.'
AEA's 35 airline members made significant progress in cutting their internal costs and streamlining operations to offer 'extremely competitive' products, but soaring external costs--such as fuel and taxation--continue to hamper industry profitability, he said.
'There is little our regulators can do to cut the cost of fuel, but national governments can cut airline fuel burn by delivering on their Single European Sky promises,' Schulte-Strathaus said. 'They can recognize the fact that aviation taxation damages the economy. Finally, they can cut uncertainty by resolving conflict around the emissions trading debate. A globally acceptable solution to Emissions Trading Scheme [ETS] is a must for 2012.'
Schulte-Strathaus said that 'even if the European court of Justice [ECJ] decides that the EU ETS is in conformity with EU law, this will not placate the concerns of non-EU countries. So several are threatening with retaliation--in the form of trade sanctions, own taxes, or simply anti-EU ETS laws.'
The ruling by the ECJ in the legal challenge by Airlines 4 America (A4A) against the EU ETS is expected Dec. 21. An ECJ advocate general released an official opinion deeming that the inclusion of aviation in the EU ETS is fully compatible with international law. While the advocate general's opinion is non-binding, the court has followed them in approximately 90% of all cases ATW Daily News, Oct. 7.
'The issue should not be resolved in courts, and certainly not through trade wars,' Schulte-Strathaus told ATW. 'Hopefully, Europe will get the message that they need consensus on international solutions to international problems; otherwise, they will face yet another conflict which will negatively impact Europe's efforts to recover economically.'
Europe's leading network airlines are expected to generate a €.1.5 billion EBIT in 2011.