3. Airlines Soar on Hopes of Recovery

Airlines Soar on Hopes of Recovery

Wounded European airline stocks took off yesterday as easing fears of SARS combined with hopes for an "open skies" agreement with the United States. Traders said British Airways, KLM and Lufthansa also found support in upbeat bookings news from U.S. carrier Continental Airlines, as well as Australia's biggest carrier, Quantas, in which BA holds a 17 percent stake.
Meanwhile, strong June passenger numbers at no-frills airline easyJet sent its shares more than 15 percent higher and added to feelings the industry may have turned a corner.
BA was up 5.99 percent in trading yesterday, while KLM jumped 7.89 percent and Lufthansa 4.08 percent. Air France rose just 1.24 percent and appeared to be lagging behind due to nerves over its May passenger figures.
"Since the September 11 attacks in the United States, the airline industry has endured an unbelievable series of disasters," said one German trader.
"After terrorism, war, disease and economic collapse, we are finally beginning to see a few rays of light. SARS infections seem really to be falling and we are moving toward a U.S. open skies agreement that could only help any recovery even more."
EU transport ministers agreed on Wednesday to seek a single accord on air traffic rights with the United States rather than the bilateral deals currently in place.
Traders said investors were especially upbeat about analysts' comments about what an open aviation pact with the United States would mean for European airlines.
"The main conclusion we see is that it will become possible for European airlines to merge with or acquire other European airlines in the future," said an industry analyst.
"We want to make clear that yesterday's news is positive for the whole European airline industry, as full mergers and / or acquisitions give large possibilities for improvement and make them more profitable in the long run."

 
 
 
 

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Questions

Choose the best explanation for the following words and phrases from the reading...
  1. "We are finally beginning to see a few rays of light" means:
  2. "an unbelievable series of disasters" means:
  3. "Airlines soar on hopes of recovery" means:
  4. "Upbeat bookings news" means:
  5. "Air France…appeared to be lagging behind" means:
Are the following statements about the reading correct?

1.   Investors are concerned that Air France doesn't have enough customers.

2.   The "open skies" agreement will mean almost immediate profit for European airlines.

3.   Only one major air traffic agreement exists between the U.S. and Europe at the moment.

4.   Despite economic improvements, analysts are still worried about the spread of SARS affecting airline revenues.

5.   British Airways owns 17 percent of Continental and Quantas.

 

 

Answer Key