PARIS, Oct 7 — European airlines are slashing more than 2,000 jobs and moving towards US-style baggage charges, raising the prospect of winter disruption as demand picks up.
Irish carrier Aer Lingus said it would cut 676 jobs and curb pay in a bid to survive the industry’s worst recession in decades — set to cost airlines US$11 billion (RM4.02 billion) globally this year.
It moved a day after British Airways announced plans to cut the equivalent of 1,700 cabin crew, drawing a threat of strikes in coming months.
“Job cuts seem to be extreme and draconian and an overreaction to the current difficult economic climate”, said Gerry McCormack, national industrial secretary of the Siptu union which represents Aer Lingus ground staff.
In Spain, national carrier Iberia said it was considering whether to charge passengers for checking bags, borrowing a practice invented by low-cost rivals and which has spread to traditional carriers in the United States.
“This is a trend in the industry. We’re studying it seriously but so far we haven’t decided how much to charge or when to do it,” a spokeswoman said.
US airlines have been ratcheting up their bag-check fees though analysts say they risk alienating flyers.
United Airlines this week offered passengers the right to check in baggage for a year for US$249.
Spanish consumer asssociation Facua said it would sue Iberia if the airline began to charge for baggage. “The law states the company is obliged to include both the passenger and their baggage within the price of the ticket,” the group said.
Shares in Iberia and Aer Lingus rose 0.4 per cent and 7 per cent respectively.
Both airlines face doubts over their independence due to the shocks battering Europe’s fragmented airline industry.
Iberia is in talks to create Europe’s third largest airline with BA. Aer Lingus has been struggling to avoid succumbing to 30 per cent shareholder Ryanair.
“Employees and politicians stand between a rock and a hard place. While difficult to swallow, these proposals offer the best shot at survival and independence,” Dublin-based brokerage Bloxham said of the Aer Lingus restructuring plan.
Airlines have been reporting signs that demand has begun to stabilise, helping sector stocks in Europe recover about a third since their low point in March, led by Air France-KLM.
Air France-KLM said its September traffic had fallen 3.7 per cent, about in line with the previous two months and far less dire than the 9.4 per cent slump seen in March.
It boosted the proportion of seats sold by cutting capacity more aggressively but predicted continued pressure on revenues, sending its shares down 1.3 per cent.
“Market conditions are similar to those prevailing before the summer and unit revenues remain under pressure,” it said.
After being criticised for responding slowly to the drop in demand, Air France-KLM is among airlines that have displayed discipline during the crisis by taking seats off the market.
Investors fear capacity could quickly be reinstated as airlines grab at the first signs of recovery. Meanwhile losses are being inflated by price-cutting and oil prices near US$70.
Singapore Airlines and Air New Zealand reported improving demand this week but cautioned a sustained recovery was still far from certain.
British Airways carried 0.8 per cent fewer passengers in September compared with the same month a year ago but the proportion of seats sold rose, it said on Monday.
Shares in Finnair slipped after the Finnish carrier said leisure traffic fell 30 per cent in September and warned demand was expected to fall further.
Scandinavian airline SAS said yields, or average revenue per seat sold, remained under pressure. — Reuters
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