Friday, 14 May, 2021

EasyJet withstands headwinds in the airline industry in Europe


Low-cost airline EasyJet said on Tuesday it had set a new record with nearly 90 million passengers carried in one year, a 10% jump from its previous fiscal year.

Easyjet shines while low cost looks gloomy

Low-cost carrier EasyJet weathered the headwinds sweeping the airline industry in Europe during its 2017-2018 financial year, marked by rising profits and a record number of passengers carried.

The British company on Tuesday reported a net profit of 358 million pounds (400 million euros) for its fiscal year from October 1, 2017 to September 30, 2018, up 17%. It carried 88.5 million passengers (10%), with a load factor slightly improving by 0.3 percentage point, to 92.9%.

The company with the orange and white logo has consolidated its second place among low-cost airlines in Europe, behind Irish Ryanair. EasyJet benefited from a 17% jump in turnover to 5.9 billion pounds (6.6 billion euros). Its revenues increased both from its ticket office and from its ancillary revenues (such as meals served on board).

Bankruptcy of Air Berlin and Monarch

The company continued to grow on its European short-haul routes in a turbulent context for its competitors – British companies Monarch and German Air Berlin went bankrupt – while Ryanair, faced with social unrest, had to cancel thousands of flights .

The Italian Alitalia is also in difficulty and EasyJet has filed one of the three takeover offers put on the table for the company, currently being examined by the authorities in Rome.

Another distressed company, the British low-cost Flybe, announced last week that it was going up for sale and talking to potential buyers. EasyJet chief executive Johan Lundgren, however, said on Tuesday that his company was “not interested in Flybe at the moment,” during a conference call.

In the wake of its good results, EasyJet closed a purchase option for 17 Airbus A320neo, with a list price value of $ 1.9 billion. To date, the company has ordered a total of 468 Airbus (of the A319, A320 and A321 families) and flies a fleet made up of 100% aircraft from the European manufacturer.

The action wins

EasyJet, on the other hand, had to endure losses following its extension to Berlin’s Tegel airport, where it bought part of the activity of the former Air Berlin – although it stressed that the transition period following this acquisition was now complete.

The British company also suffered from an increase in its costs, due to wage increases granted to its crews and the negative impact of traffic disruptions linked to strikes by air traffic controllers, particularly in France. For the financial year from October 1, 2018 to September 30, 2019, EasyJet plans to increase its total seat capacity by 10% and has deemed the first reservations for the next good season to be “promising”.

On the other hand, it should suffer a little from the impact of the rise in oil prices on its kerosene bill, although it stressed that it was well hedged against the unforeseen events of the black gold market. On the issue of Brexit, Mr. Lundgren stressed that his company was “ready” for all scenarios, while adding the prospect of the British departure from the EU on March 29 had “no effect on bookings ”.

Based in Luton in north London, EasyJet announced last year the creation of a new company, EasyJet Europe, based in Vienna, to allow the British company to continue to fly unhindered in the EU regardless of or the outcome of negotiations between London and Brussels. Despite these various reassuring news, investors continued to shy away from EasyJet shares: it dropped 5.70% to 1.108 pence around 3:00 p.m. GMT on the London Stock Exchange, bringing its plummet to almost 25% since the start of the year.

(With AFP)

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