Germany's Lufthansa warned of a considerable fall in operating profit this year and Ireland's Aer Lingus gave up any chance of a pretax profit as airlines brace for a sharp slowdown in holiday and business travel. Lufthansa, one of the biggest airlines in Europe, beat expectations with a 2008 operating profit down just 2.4 percent at 1.345 billion euros ($1.71 billion) but warned this year the figure would fall “considerably”. “The year 2009 will make great demands of us all,” the airline said. Earnings could improve in 2010, it said, provided the market starts recovering from the end of the third quarter this year. “Given that statements on the duration and extent of the worldwide recession are becoming more and more negative, we continue to see above-average operating risks in 2009,” said DZ Bank analyst Robert Czerwensky, who has a sell rating on Lufthansa. Airlines are struggling to remain profitable as businesses and consumers trim travel budgets amid the global economic crisis. The world's airlines lost up to $8 billion in 2008, the International Air Transport Association said last week. Lufthansa made a profit, but its net of 599 million euros ($760 million) missed analyst forecasts of 712 million and marked a 64 percent fall from a year earlier. Irish carrier Aer Lingus, which fended off a hostile bid by budget carrier Ryanair, swung to an after-tax loss of 107.8 million euros in 2008 from a profit of 105 million a year earlier. It said it no longer expected to post a pretax profit in 2009 and saw fare prices slumping at least 10 percent. Chief Financial Officer Sean Coyle told Reuters that bookings declined sharply in February. Falling demand has forced airlines to sell tickets at lower prices and fly fewer routes, cutting revenue. “We now assume that total revenues will be down by 10 percent in the year with modest growth in passenger volumes weighed down by an average 12 percent decline in average fares,” NCB Securities analyst Neil Glynn said in a note regarding Aer Lingus. “Trading conditions continue to deteriorate in Ireland,” he noted, while saying he had a positive view of Aer Lingus' plans to diversify its network through partnerships abroad. Lufthansa said it expected to reduce its overall capacity by 0.2 percent in 2009, after a 2008 increase of 4.9 percent. But the signs this year so far are not encouraging, with its February passenger traffic down 9.8 percent and a load factor -- the proportion of available seats actually sold “Recent traffic stats for January and February have proved that the negative momentum is ongoing,” WestLB said in a note. Frankfurt airport operator Fraport said February passenger traffic at the Lufthansa hub fell 4.8 percent in February, with a 25.6 percent drop in cargo volumes. In Asia, Hong Kong's Cathay Pacific posted a record $1 billion second-half net loss on Wednesday and warned the year ahead will be “extremely challenging”. Delta, the world's largest carrier, said on Tuesday it would cut international capacity by an extra 10 percent from September. Lufthansa shares were up 2.37 percent to 8.38 euros by 1109 GMT, while Aer Lingus plunged almost 37 percent to 0.5 euros.
