17 June 2008

EU Traffic powers ahead driven by LCCs and mega carriers

While BA's traffic continues to show declines – albeit at a lesser pace – the big 3 LCCs are powering ahead. So too are the other strong legacy carriers in particular LH and AF+KL. All 3 big LCCs report strong traffic gains – FR +22%, Easyjet +16%, Air Berlin +28%. The model still works. But Air Berlin should be looking for better solutions. It has essentially dumped the long haul scheduled business and is now looking to cut elsewhere.

Even those carriers who are most vulnerable in the second Tier EU legacy carriers (SK, IB etc) are appearing quite strong. But this is going to be short term. We believe that the top tier big 3 EU carriers have the ability to easily weather the economic climate. Similarly the 2 British Isles based LCCs. Everyone else without exception is vulnerable.

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