Lufthansa announced a higher than expected 2017 profit target on Thursday, saying a rebound in demand in the US and Asia and a breakthrough pay deal with pilots had improved its prospects. The German airline said it expected adjusted earnings before interest and tax (EBIT) to fall only slightly from E1.75b in 2016 whereas analysts had predicted a slump in underlying profits this year to E1.38b. Lufthansa's shares jumped nearly 6% to trade above E15 for the first time in a year and were 4.4% higher at 1213 GMT, thanks to the profit target and the pay deal ending months of strikes by pilots struck a day earlier. Like its rivals, Lufthansa's ticket prices came under pressure in Europe and elsewhere last year from overcapacity and fierce competition from airlines with a lower cost base. The carrier said it still expected ticket revenues to fall this year, but not by as much as the 6% drop in 2016, and that its fuel bill would rise by about E350m to E5.2b. But it said trading had been good in the first few months of 2017 thanks to a rebound in US and Asia demand and that its cost base would improve thanks to the deal with its pilots, even though it would only have a positive impact on underlying profit from next year. "We saw an encouraging trading environment in January and February and ... the year started with a real breakthrough on the labor side," CE Carsten Spohr said. Wednesday's deal on pay and pensions with pilots is expected to reduce annual pilot costs by about 15%, or some E150m euros, Spohr said.<br/>
star
US President Donald Trump’s plans to cut taxes and regulations look more favorable to business than Canadian policies, according to Air Canada’s CEO. “This industry isn’t from a taxation perspective adequately competitive, we know the US is about to become even more competitive,” Calin Rovinescu said. Canadian airlines will be hurt by plans to introduce a carbon tax and may suffer if the government’s intention of privatizing airports raises costs, he said. Airport rents and landing fees in the country already rank among the highest in the world, according to a 2016 study by the Montreal Economic Institute think tank. Canada’s biggest airline has focused its growth plans on carrying international passengers through hubs such as Toronto and Vancouver, a strategy that relies partly on smooth traffic from the U.S. While Trump has said he wants to rework the North American Free Trade Agreement and limit travel from some countries, such changes won’t hurt Montreal-based Air Canada, Rovinescu said in an interview Tuesday. “We will be able to do a lot of business” with the US, he said. “My sense of the border dynamics between Canada and the U.S. is that it won’t become more complicated, indeed it may well become more transparent from a commercial perspective.” Some of Canadian Prime Minister Justin Trudeau’s policies could benefit airlines that are hurting from taxes and fees that often account for 60% of a plane ticket’s price, Rovinescu said. Canada is studying increased passenger rail service around Montreal and Toronto, which could move travelers to larger hub airports, although competition for passengers might increase, he said.<br/>
United Continental Holdings boosted the number of seats the airline plans to add this year, stoking investor concern that the industry may hurt its ability to raise prices. US carriers are heading toward their worst monthly stock decline since June, weighed down by plans from United and American Airlines to add flights and routes. With a recovery only now under way from a two-year slump in fares, the slide signals anxiety that the rebound may vanish. “It’s just this sense by investors that we keep adding more and more capacity, and they’re somewhat frustrated,” Cowen and Co. analyst Helane Becker said, pointing to recent flights added for Chicago; Newark, New Jersey; and Fort Lauderdale, Florida. United now expects its number of seats to increase as much as 4.5% in the US, rather than 2.5%, according to slides prepared for a conference on Wednesday. The airline on Feb. 27 announced the addition of 47 domestic round-trips and followed with published flight schedules last week showing significant increases. There were no indications of any offsetting cuts, analysts said. United CEO Oscar Munoz told investors at a JPMorgan Chase & Co. conference on Wednesday that the boost to capacity is “not shoot-from-the hip.” The new routes and flights are designed to build connectivity at its hubs and will add to profits immediately. “This is what you would want us to do, this is what you pay us for,” Munoz said.<br/>