Aer Lingus and BAA update on volcano disruption

20th Apr 2010 11:27

With flights starting to take off again in parts of the UK and travel stocks having updated the market on costs incurred as a result of the volcano cloud that enveloped Europe, clarity is starting to emerge on economic effects of the disruption. Some internal flights have taken off from Glasgow and Edinburgh airports, though the situation is still uncertain given that the Met Office is reporting a further ash cloud heading towards Britain from Iceland.Yesterday, airlines British Airways and easyJet and travel groups TUI and Thomas Cook updated on costs incurred. They were joined today by the Irish airline Aer Lingus and the airport operator BAA.Aer Lingus expects the total cash costs for five days of flight disruption due to the volcanic ash cloud over Europe to be between €15m and €20m. The current daily run rate stands between €4m and €5m, as a result of lost revenue and the costs of passenger disruption, according to the carrier.UK airports operator BAA said the disruption caused by the volcanic ash is costing it £5-6m each day but added that it will have no "material impact" on finances. "The current expected maximum daily impact on Adjusted EBITDA and cash flow of the airport closures is expected to be £5-6 million across all of BAA's UK airports," it said.British Airways said it estimates that lost passenger and freight revenue together with the costs incurred supporting passengers is about £15m to £20m a day.Chief executive Willie Walsh said that the airline and its European peers have asked the EU and national governments for financial compensation, as had happened in the aftermath of the September 11 terrorist attacks.Its budget peer easyJet says the cumulative profit impact up to today is around £40m, representing lost revenues and costs incurred as a result of the disruption.'The continuing daily profit impact is estimated to be around £5m,' it said.Travel agent TUI, the First Choice owner, said about 100,000 of its customers due to return home yesterday were left stranded by the flight ban imposed after the eruption of the volcano in Iceland last week.TUI estimates the cumulative cost to the group, up to and including yesterday, 18 April 2010, is about £20m. Estimated daily costs thereafter will run at about £5m to £6m, it adds."The welfare of our customers is paramount and the group is providing appropriate assistance to all those in resort whose return home has been delayed,' it said.'In the UK, of those customers who were due to go on holiday and whose flights have been cancelled, around 90% are choosing to re-book their holidays for a later date.'TUI's fellow travel group Thomas Cook said it estimates the daily impact of the disruption at around £7m.'The group has substantial banking facilities and as at 31 March 2010 had headroom of around £400m under our committed banking facility,' it said.The International Air Transport Association (IATA) sharply criticised European governments.'In the face of such dire economic consequences, it is incredible that Europe's transport ministers have taken five days to organize a teleconference,' said Giovanni Bisignani, IATA's director general and chief executive. While companies in other sectors have not rushed to update the market on the disruption caused by the volcano cloud, suppliers of food and other perishable goods are expected to have incurred some costs. However, other businesses have clearly seen increased activity during the chaos, most notably Eurostar, the operator of the cross-Channel train service.