Gość: jacek
IP: *.u.mcnet.pl
05.05.04, 17:09
EasyJet warns of competitive pressures
By Kevin Done, Aerospace Correspondent
Published: May 5 2004 9:18 | Last Updated: May 5 2004 9:18
Shares in EasyJet, the leading UK low cost airline, lost almost a quarter of
their value on Wednesday after the group warned that growing competitive
pressures could undermine its performance in the second half of the year,
when it traditionally generates all of its profits.
Ray Webster, EasyJet chief executive, said: "We are currently seeing
unprofitable and unrealistic pricing by airlines across all sectors of the
European industry, seeking to grow or maintain their market share."
The steep drop in the EasyJet share price follows the 31 per cent one-day
fall in the Ryanair share price in February, when the rival Irish low cost
carrier issued its first profit warning since flotation in 1997.
In late morning London trading EasyJet shares had recouped some of their
early losses and were down 62p, or 21 per cent, at 230p.
Mr Webster said that demand in the second half of April had softened "due to
competitive pressure and a weaker than expected Easter", while in May
passenger numbers were "tracking slightly lower than our expectations".
Numbers were "currently as anticipated" for June.
The company brought forward the release of its passenger data for April and
disclosed that its load factor - the share of available seats filled - had
dropped last month year-on-year from 85 per cent to 82 per cent, one of the
biggest declines for many months.
Passenger volumes rose by 14 per cent to 1.95m but failed to keep pace with
increasing capacity.
The airline revealed that its average fares in April had fallen by 5 per
cent, partly owing to the timing of Easter and the May public holidays,
compared with a 1.6 per cent rise for the six months from October to March.
For the full year to the end of September, EasyJet is increasing its capacity
by 20 per cent, but the pace will be higher in the second half following an
increase of only 15 per cent in the first six months.
In February the company said that it was "cautiously optimistic" about the
outlook for the full year, but it was forced on Wednesday to lower
expectations.
"Given the increasingly competitive marketplace it is appropriate now to be
cautious about the performance for the full financial year," said Mr Webster.
His new-found caution followed the warning last week from Michael O'Leary,
Ryanair chief executive, that the next winter season would be "awful" in the
European airline sector amid continuing fare wars and a shake-out among the
many recent start-up low cost airlines.
The latest failure in the European aviation industry came at the weekend with
the bankruptcy of Duo, the UK airline launched last year at Birmingham and
Edinburgh airports. It has ceased flying with the immediate loss of 260 jobs.
The warnings from Mr Webster about the outlook for the next six months
overshadowed the airline's improvement in the first half with sharply reduced
losses in the six months to the end of March.
In the first half EasyJet reduced its loss (before goodwill, exceptional
items and tax) by 24.2 per cent from £24.4m to £18.5m.
Its pre-tax loss fell from £48.1m to £27.3m reflecting most importantly the
absence this year of £5.6m of charges for integrating Go, the rival airline
taken over in 2002, and the £7.9m charge a year ago for terminating the
expensive option to take over Deutsche BA.
Turnover in the period increased by 18 per cent from £373m to £440m, while
passenger numbers rose by 15.9 per cent to 10.8m. The average fare rose by
1.6 per cent to £38.06.