AT A GLANCE: European Airlines Rack Up Huge Losses

The global airline industry is suffering one of its worst ever downturns as the credit crunch and economic downturn have caused steep falls in passenger numbers and cargo volumes. The International Air Transport Association, or IATA, last month said it expected the industry to record accumulated losses of $9 billion in 2009, almost double its previous forecast, reflecting a rapidly deteriorating revenue environment.

European scheduled carriers have racked up huge losses in the first half of the year as a result of the downturn, and have responded by grounding planes and cutting costs and jobs. Low-cost carriers have fared slightly better, but still have seen profits fall sharply.

AIR FRANCE-KLM (AF.FR): The Franco-Dutch airline swung to a deep fiscal first-quarter net loss of EUR426 million, as the economic crisis and EUR252 million of fuel hedging losses hit hard.

The company forecast a continued deterioration in its passenger business in the second quarter and said the declining trend in its cargo business will continue into the fiscal second half, when the situation should gradually stabilize.

Revenue in the passenger business was down 19% in the three months to June 30 from the like period a year earlier, with cargo revenue off 42%. Total revenue fell 20.5%.

The airline pulled out of the privatization tender for CSA Czech Airlines earlier this month, citing the need to preserve cash due to the downturn.

DEUTSCHE LUFTHANSA AG (LHA.XE): The German flag carrier swung to a net loss of EUR216 million in the six months to June 30 as it warned that falling revenue per passenger was more serious for the company than softening demand.

Chief Financial Officer Stephan Gemkow said the company doesn't expect the economy to improve in the near-term. Demand will stay weak and average revenue per passenger will stagnate at best, he said.

It reiterated its goal of generating an operating profit in 2009 despite "considerable risks" linked to the economic crisis, and hopes to wring EUR1 billion in savings by the end of 2011 at its core passenger operation. The risks include possible further falls in demand and higher fuel prices.

Sales in the six-month period fell nearly 16% to EUR10.2 billion, from EUR12.06 billion.

It made a profit of EUR40 million for the three months to June 30, down from a profit of EUR337 million a year earlier.

BRITISH AIRWAYS PLC (BAY.LN): The U.K. flag carrier reported its first ever fiscal first-quarter pretax loss as a private airline due to falling passenger numbers and cargo volumes, but Chief Executive Willie Walsh said traffic had stabilized and may improve slightly during the peak summer months.

However, like rivals, BA warned that those consumers still flying were spending less and yields were volatile.

Its loss after tax for the three months to June 30 was GBP106 million, compared with a GBP27 million profit a year earlier, as revenue fell 12.2% to GBP1.98 billion.

BA, which is in merger talks with Spain's Iberia Lineas Aereas de Espana SA (IBLA.MC), said it was hit mainly by falling numbers of passengers flying business and first class during the downturn - its business-class traffic across the Atlantic has been its main profit driver - lower average revenue per passenger and lower fuel

It said it's on track to cut 3,700 jobs in the current financial year and has shed 1,450 jobs since March 31. Over the past 12 months, it has reduced its staff by 4,000 workers to 39,175.

IBERIA LINEAS AEREAS DE ESPANA SA (IBLA.MC): The Spanish airline, which is in merger talks with British Airways, swung to a net loss of EUR72.8 million in the three months to June 30, hit by falling demand for air travel as the recession gripped Spain.

Revenue fell 22% to EUR1.07 billion.

The company has reduced domestic flights in favor of more lucrative long-haul flights, mostly to Latin America. This segment has been hit by the international financial crisis, as well as the company's other strategic bet during Spain's boom years - an expanded business section.

It was silent on its merger talks with BA.

SAS AB (SAS.SK): The Scandinavian airline said it would cut more jobs and reduce salaries and other costs after reporting its seventh consecutive quarterly net loss, as traffic fell and those still flying spent less. The airline presented a new 2 billion Swedish kronor ($272 million) cost-savings program, which it said will result in further layoffs of between 1,000 and 1,500 staff.

SAS's net loss for the three months ended June 30 was SEK1.05 billion, wider than the SEK422 million net loss a year earlier, as revenue fell 15% to SEK12.22 billion from SEK14.41 billion.

AER LINGUS PLC (EIL1.DB): The Irish flag carrier is struggling and will have to further cut costs and reduce ticket prices to keep up with rival airlines, its chief financial officer said after the airline reported a wider first-half net loss.

The former state-run carrier, which has resisted two takeover bids from rival and shareholder Ryanair Holdings PLC (RYAAY), posted a net loss for the six months to June 30 of EUR73.9 million, from a net loss of EUR21.6 million a year earlier.

First-half revenue fell 12.2% to EUR555 million, although passenger numbers rose marginally to 4.94 million from 4.86 million a year earlier. Average fares fell 17.1% on the year, with short-haul fares falling 13.1% and long-haul prices down 18.5%.

RYANAIR HOLDINGS PLC (RYA.DB): Europe's largest low-cost carrier by passenger numbers swung to a net profit in the three months to June 30, but its outlook remained cautious and it said fiscal-year earnings would be at the lower end of its guidance due to an expected 20% fall in average revenue per passenger.

The Irish carrier said it has limited visibility beyond the next two months and expects passengers to be price sensitive for the rest of the year.

Net profit for the three months to June 30 was EUR123 million, compared with a net loss of EUR90.5 million a year earlier. Revenue fell 0.3% to EUR774.7 million from EUR776.9 million.

Deputy Chief Executive Michael Cawley said a decision to drive fares lower was necessary to sell seats, especially during the winter season. He added that provided costs could be cut further, there would be no floor to fare reductions.

The airline has been pulling out of airports with higher charges, such as Stansted Airport and Dublin Airport, in favor of cheaper European bases so it can maintain or raise margins.

-By Steve McGrath, Dow Jones Newswires; 44-20-7842-9284; [e-mail]