There’s a growing chance that Europe’s airline crisis will start easing from later today.
Reports from London and Europe say flights will start resuming from 4 pm Australian time today.
There will be a series of zones: flights closest to the worst of the ash cloud will be banned, limited services will be allowed further away and in a third zone where there’s no ash, restrictions will be lifted completely.
But around 9 am Tuesday Australian time, there were reports of a new eruption from the volcano on Iceland, putting in doubt the re-opening planned for LOndon and some other European airports later today.
European airlines like Lufthansa and British Airways say their losses are in the tens of millions of dollars a day.
Qantas says flight disruption on its European routes due to the Icelandic volcanic ash cloud is costing it about $1.5 million a day.
Other airlines, such as British Airways and Lufthansa say the cost is in the tens of millions of dollars a day.
Qantas cancelled flights to and from Europe for the next two days.
The airline will issue an update later today.
The airline cancelled seven flights from Europe and five outbound flights for Tuesday and Wednesday, extending by one day the cancellations of services that began late last week and that is now entering its sixth day.
So far the cost would be around $10 million, but much of this could be made up by people resuming their travel when the ash crisis ends, or travelling again later in the year.
"Customers due to travel on cancelled services will be transferred to next available scheduled services or offered a refund," Qantas said in yesterday’s statement.
"Next available services to Europe are not known at this time and cannot be confirmed until official notification from European authorities on when flights can resume.
"Customers in Singapore, Hong Kong and Bangkok who have revised their travel plans to Europe and wish to return to Australia will be booked on the next available return services at no cost.
"Qantas will be doing everything to meet passenger needs once flights into Europe are able to resume however access to UK and European airports will be difficult due to the backlog of flights from around the world. This situation would be likely to continue for some days."
But even when the current situation is over, flights through Europe, to and from North America and out of Asia to Europe will be hit for a number of days as services and airports return to normal.
Access to UK and European airports will be difficult due to the backlog of flights from around the world.
According to brokers Goldman Sachs JBWere, “the total impact of the European flight restrictions on pre-tax profit will be between $1.5 and $2.0m per day. However, at this stage, the duration of the flight restrictions remains uncertain.
"We are currently forecasting FY10 Pre-tax Profit of $395m (vs. guidance of ~$300-400m and consensus of ~$392m).
"However, this event creates uncertainty around near term cash flows (and hence a likely adverse near term share price reaction).
"Additionally, we note that Flight Centre has suggested that while "most customers want to take their European holidays as soon as airports reopen", "clearing the backlog of European bound passengers was likely to have flow-on effects for customers looking to travel later in the year".
"Additionally, we note that Flight Centre has suggested that while "most customers want to take their European holidays as soon as airports reopen", "clearing the backlog of European bound passengers was likely to have flow-on effects for customers looking to travel later in the year.’
Qantas shares dipped 6c, or 2%, to $2.92 yesterday.
Qantas inbound services from London and Frankfurt to its Asian hubs of Bangkok, Hong Kong and Singapore have also been cancelled.
However, its services between Australia and Asia are still operating.
Meanwhile, Malaysia Airlines said it was flying to Rome, where airports remain open, from Kuala Lumpur. Airports in Athens and Madrid are also open.
And in Europe, analysts said the volcanic ash cloud has grown into a financial black hole for airlines, airports and travel groups (and hotels and other services) that could be 1.5 billion euros (close to $A2 billion) and rising.
Airlines and other travel industry sectors already face a bill of more than 1.2 billion euros ($A1.74 billion) from the four-day closure of much of Europe’s airspace.
European carriers such as KLM, Lufthansa and Air Berlin have been trying to force the authorities to start lifting the ban by questioning the suggestion that ash blown over Europe from a volcano in Iceland is a threat to jet engines.
Lufthansa says it is losing $US34 million (around $A37 million) a day from the crisis and Emirates says it is losing $UIS10 million a day, mostly from the cost of accommodation for about 6,000 stranded passengers.
Only 4,000 of the 24,000 flights that would normally operate on a Sunday across Europe were made. Up till Sunday night, Europe time, more than 63,000 flights have been cancelled.
