Lufthansa, IAG close in on Air France-KLM in traffic rank

Deutsche Lufthansa AG and British Airways parent IAG SA closed in on Air France-KLM Group at the top of Europe’s airline rankings in 2016 as passenger traffic at the Paris-based carrier was dented by pilot strikes and sluggish demand amid a spate of terrorist attacks.

Lufthansa’s traffic, or the number of customers carried multiplied by the distance flown, advanced 2.8 percent to 226.6 billion revenue passenger kilometers last year, the German carrier said Tuesday. That compares with a 9.7 percent jump to 243.5 billion RPKs at London-based IAG and just 2 percent growth to 261.1 billion at Air France-KLM.

IAG, created via a merger of BA and Madrid-based Iberia in 2011, overtook Lufthansa to claim second spot in the European rankings in 2015, buoyed by the purchases of British Midland, Barcelona-based discounter Vueling and most recently Aer Lingus. Its figures for 2016 included 12 months of operations from the Irish carrier for the first time.

Air France-KLM is clinging on to its lead after shying away from consolidation since its formation in a Franco-Dutch deal in 2004 and failing to deliver significant cost savings at its main Paris-based division. IAG Chief Executive Officer Willie Walsh has cut thousands of jobs at Iberia, used Vueling to combat low-cost challengers led by Ryanair Holdings Plc, and embraced the rise Mideast carriers by inviting Qatar Airways to join the Oneworld alliance in a move that led the Gulf No. 1 to become the European company’s top investor.

Both Air France-KLM and Lufthansa are seeking to bolster profitability by switching failing short-haul routes to new divisions with a lower cost base, plans that have met with hostility from unions. At Air France, CEO Alexandre de Juniac stood down in July, with his successor Jean-Marc Janaillac pledging to take a more conciliatory approach, while the German carrier’s chief Carsten Spohr has endured three years of industrial action that have cost more than half a billion euros and wiped out 4,500 flights in November alone. (Bloomberg)