WRAPUP 1-Volcanic ash may return to Europe, hit air traffic

By Tim Hepher and Maria Sheahan PARIS/FRANKFURT, May 10 (Reuters) - Travellers in Europe face fresh air traffic disruptions as a volcanic ash cloud that cost airlines millions of euros last month started drifting back to the continent, according to authorties. European air traffic agency Eurocontrol said on Monday areas of higher ash concentration could move from over the Atlantic Ocean back toward the Iberian peninsula, threatening fresh airspace closures in Portugal and Spain. Europe has been dogged for weeks by repeated shutdowns of air traffic since an erupting volcano under the Eyjafjallajokull glacier in Iceland started spewing ash in April. Hundreds of flights were cancelled over the weekend after the shifting cloud sparked fresh fears of engine-clogging ash. Italy and Germany reopened their airspace on Sunday, but restrictions were left in place in parts of Portugal, Spain, Austria and the United Kingdom. The biggest closure so far lasted for almost a week from April 15, causing about 100,000 flight cancellations, stranding millions of passengers and costing airlines more than $1.7 billion in lost revenue. Volcanic ash is abrasive and can strip off aerodynamic surfaces and paralyse aircraft engines. It can also damage aircraft electronics and windshields. The most recent closures led to fresh criticism of how air traffic authorities are handling the situation. Germany's Lufthansa and Air Berlin called for authorities to gather data on ash particles rather than just relying on computer models. Europe's airlines are now starting to tally up the ash cloud's damage to their business in terms of passenger numbers. Air France-KLM said it lost nearly a quarter of its European passenger traffic in April due to airspace closures from the volcanic ash cloud, driving total traffic down 16 percent. Irish airline Aer Lingus said it carried over a quarter fewer passengers.

UK airports handled 23 percent fewer passengers in April, owners Ferrovial said. Fraport, operator of Frankfurt airport in Germany, is due to publish its April traffic figures as well as first-quarter results on Tuesday. The hit to April passenger traffic comes just as airlines around the world start to recover from a severe drop in traffic that reached its severest point in March 2009. According to industry body International Air Transport Association, the world's airlines lost about $9.4 billion last year as customers curbed spending during the recession. They stand to lose another $2.8 billion this year, excluding any impact of the volcanic ash cloud. Air France-KLM reiterated that every day on which it has to completely suspend its flights lowers its net operating result by 35 million euros. Lufthansa, which is due to publish traffic figures on Tuesday, has said it lost almost 200 million euros due to volcanic ash in April. "The snafu over the weekend will likely cost Lufthansa a few more million euros and be visible when traffic figures for May are released," LBBW analyst Per-Ola Hellgren said. Shares of Lufthansa were up 2.5 percent by 1318 GMT, Air France was 5.8 percent higher and Aer Lingus had gained 3.8 percent as a rescue package to tackle the euro zone debt crisis lifted markets across Europe. (Additional reporting by Padraic Halpin in Dublin and Rhys Jones in London; Editing by David Cowell) ($1=.7453 Euro) Keywords: AIRLINES/VOLCANO/ Keywords: AIRLINES/VOLCANO/ (maria.sheahan@thomsonreuters.com; +49 69 7565 1286; Reuters Messaging: maria.sheahan.thomsonreuters.com@thomsonreuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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