Aegean looking to capitalise on Olympic’s on-going problems

Image: Aegan Planes

Well-run airlines may not be synonymous with Greece given the legendary troubles endured by flag carrier Olympic Airlines/Airways over the last three decades, but award-winning Aegean Airlines has rapidly emerged as a profitable, efficient and ambitious airline which may soon overtake Olympic in passenger numbers.

Formed by a private consortium in 1999 after the introduction of deregulation in the domestic market, the airline has grown both organically and through acquisition and merger to have a fleet of 24 aircraft and is on course to carry over five million passengers in 2007.

Chart: Aegan Airlines traffic 1999-2006
Source: Airline presentation

Growth accelerating in 2007

The introduction during the first quarter of 2007 of three new A320s has helped the airline to consistently achieve 20% growth during recent months.

Chart: Aegaen Airlines seasonality
Source: ERA

In the first nine months of 2007 the airline has reported that traffic is up 19% to 4.06 million with international growth (34%) outstripping domestic growth (12%) by a considerable margin. Charter traffic which represents around 10% of the airline’s passenger numbers rose by just 10% with scheduled growth at 20%. Due to the rapid growth in scheduled capacity the scheduled load factor for the period has fallen from 72.8% in 2006 to 70.3%.

The average number of year-round scheduled routes has increased from 26 to 30 while the average sector length has risen by 8% to 643 kilometres. This is still relatively low compared to many similar European airlines but reflects the fact that just under two thirds of passengers are flying on relatively short domestic services.

Most critically the airline’s profitability is still improving with a 45% increase in net profit for the period to €33.4 million, resulting in an improved net margin of 9.0% (compared to 7.5% for the same period in 2006)

Image - Blue MagazineMore popular than Olympic

In 2006 Aegean had an estimated 23% share of passengers passing through Athens International Airport, considerably less than Olympic whose share is around 40%. Despite this a survey by the airport during the first quarter of 2007 found that 43% of passengers named Aegean as their favourite airline while only 24% named Olympic.

Aegean also has a 40% share of traffic at Thessaloniki and a 15% share at Heraklion. New international routes launched in 2006 from Athens were Bucharest and Cairo while early 2007 saw the introduction of new routes from Athens to Frankfurt and Munich operated as a code-share with Lufthansa. Aegean is a ‘Regional Partner’ of the German carrier, a relationship that may serve it well as it looks to become Greece’s leading airline. New routes for summer 2008 were due to be announced at the end of November but have not yet been made public.

Comparison with Olympic

The following table summarises some of the key performance indicators of Greece’s two main carriers. Given its track record maybe it is no surprise that Olympic is rather reluctant to publicly reveal detailed financial figures.

Aegean Olympic
Passengers 2006 4.45 million 5.64 million
Passenger growth 2006 v 2005 +12.4% -2.4%
Load factor 2006 72.9% 68.7%
RPK 2006 (million) 2,933 7,042
ASK 2006 (million) 4,024 10,243
Total revenue 2006 USD 506 million USD 842 million
Operating profit/loss 2006 USD 51 million not known
Net profit/loss 2006 USD 32 million not known
Net margin 2006 6.3% negative
Fleet size 24 aircraft3 A320s,15 737s,6 Avro RJ 100s 41 aircraft4 A340s, 1 A300,19 B737, 4 Q100,6 ATR 42, 7 ATR 72
Employees 1700 (estimate) too many
Share of domestic capacity (W07) 47.6% 52.4%
Share of domestic frequency (W07) 35.8% 64.2%
Domestic routes (W07) 18 63
International routes (W07) 13 38
Total routes (W07) 31 101
Countries served 6 – Bulgaria, CyprusEgypt, Germany,Italy, Romania 24 – inc. Albania,Canada, Russia,South Africa, USA
Source: Airline reports, ATI, OAG Max Online for w/c 10 December 2007

Olympic has a much wider network and operates three times as many domestic and international routes as Aegean, and operates to four times as many countries. With its larger fleet Olympic generates some 150% more ASKs than Aegean and yet total revenues in 2006 were just 66% higher.

Aegean converts to Airbus


Aegean has ordered some 25 Airbus aircraft the first of which were delivered earlier this year. These will replace the 737s and also provide capacity growth. In 2008 the airline will receive eight A320s and two A321s followed by a further six A320s in 2009 and the final six in 2010. However, given the increase in fuel costs Aegean is looking to bring forward the delivery of these aircraft so that the fleet renewal programme is completed by the end of 2009.


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