Airlines Struggle After Terror Attacks
Jennifer Billock August 04, 2016
Major airlines across the world are struggling with profits in the aftermath of terror attacks.
After terrorist attacks across the world, some major airlines are seeing a drop in profits due to fears of traveling abroad. Lufthansa, Japan Airlines and All Nippon Airways have seen these decreases in the April to June fiscal quarter.
Lufthansa’s net profit fell to $487 million from the $589 million made the year prior. Passenger volume appears to have increased, but traffic revenue took a 5.4 percent hit due to pricing pressure, the Wall Street Journal reported. Lufthansa, though, still plans to pay a dividend.
“Based on current calculations, we’re capable of paying a dividend,” Chief Financial Officer Simone Menne said in a conference call, reported by the Wall Street Journal. “The technical conditions are met.”
The German airline is also prepared to face challenges in the second half of the year, expecting the third quarter to be among the worst with 8 to 9 percent more of a fall projected in profits.
The airlines in Japan faced profit impacts due to both terrorism concerns and fear of earthquakes. All Nippon Airways’ profit decreased by 21 percent. Japan Airlines was hit particularly hard, with a 55 percent fall in profits, a 5 percent drop in revenue, and international flight sales down 9 percent.
As a result—and also due in part to a sharp downturn in oil prices and a stronger value on the yen—both Japanese airlines have removed fuel surcharges from international ticket prices.
Air France-KLM and EasyJet are also noticing sales decrease due to terror fear and political turmoil in the UK.
[Photo: Points Pinnacle]
I have intentionally avoided Europe in my int'l travel, continuing to opt for Asia even when it means getting more creative on the routing/awards. I have no desire to take on the risk of delays from one of the many disruptive events we've seen recently in the continent. As for the pricing pressure, we've seen crazy low-cost deals to lure vacationers abroad, whereas in the past much less of a discount would have been sufficiently enticing. Personally I don't find that alarming.
You exactly play the game terrorists want by making people think twice about it before deciding to fly again, writing such an alarming article. You start your article telling that airlines profits dropped because of terrorism but in the Lufthansa case, you wrote that traffic has increased and the profits went down because of price pressure, so it's not because of terrorism. Why mixing everything to make big alarming titles ?