It’s been another week of bad news for the airline industry. On Monday, The Times reported budget airline Ryanair’s announcement that its profits had fallen by 47% during the first 6 months of the year, blaming the rise in fuel costs, although the company was predicting that it would break even by the end of the year.

On Thursday, the BBC reported that Hong Kong-based airline Cathay Pacific has issued a profits warning. According to The Times Online today, Singapore Airlines has reported a 36% fall in profits in Quarter 3 of the year, and this was followed by the news that British Airways had announced a 92% fall in profits for the first six months of the year.

The airlines are trying to remain positive. Talking to the BBC, British Airways’ Chief Executive, Willie Walsh, stated that whilst he believed that the first six months of the year would “be remembered as one of the bleakest on record”, he predicted that the company would end the year by making “a small profit”.

Michael O’Leary,Chief Executive of Ryanair has also remained upbeat about his company’s future, telling the Times Online that “with one of the strongest balance sheets in the airline industry, €2.1bn in cash and the lowest cost base, Ryanair is strongly positioned to take advantage of the opportunities that will inevitably arise from the financial crisis and economic recession over the coming year” (Times Online, November 3, 2008).

Whilst the airlines are hoping that the drop in the price of oil will help them to improve their finances, they have also been announcing a number of changes designed to help them to regain their positions. Ryanair plans to cut fares for its winter flights by 20% in order to encourage people to fly with them, and Michael O’Leary is still talking about the possibility of the company launching a low-cost transtlantic service in the future.

British Airways, on the other hand, has not mentioned price cuts, instead opting to cut the number of flights that it will be operating in Summer 2009 by 1% in order to increase efficiency by reducing the number of empty seats on scheduled flights.

At the moment, therefore, it’s not clear whether consumers will benefit from reduced prices across the arline industry or whether there will simply be less flights to choose from in future.

In the last few months, both Willie Walsh and Micheal O’Leary have made predictions that more airlines will go bust soon. However, Tom Symonds, Transport Correspondent for BBC News, yesterday published an article discussing the issue, stating that some experts believe that the worst may be over for the airlines.  

At the moment, we will have to wait and see.

Image courtesy of: © Lars Christensen | Dreamstime.com