- CAPA Analysis
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- IATA Code
- ICAO Code
- Corporate Address
- Hangar 89, London Luton Airport,
- Main hub
- London Gatwick Airport
- United Kingdom
- Business model
- Low Cost Carrier
- Domestic | International
- Airline Group
- Part of EasyJet plc
- Association Membership
easyJet is one the largest low-cost carriers in Europe, operating on over 600 routes via its primary hub at London Gatwick Airport. Utilising an extensive fleet of more than 200 A320 aircraft, the carrier operates operates an extensive network throughout Europe as well as to northern Africa and Israel. easyJet is part of easyJet PLC, and is listed on the London Stock Exchange.
Location of easyJet main hub (London Gatwick Airport)
easyJet share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider easyJet fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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Just after celebrating its 20th birthday, easyJet reported another record profit. From FY2010, when Carolyn McCall became CEO, to FY2015, revenue grew by nearly 60% and pre-tax profit more than quadrupled. In FY2015, it generated an industry leading 22% return on capital employed.
EasyJet has a strong pan-European network, a successful digital strategy and a very competitive cost base compared with the legacy carriers with which it mainly competes. Buoyed by its profitable growth record, easyJet has added 36 aircraft to its orders and will grow its fleet from 241 in FY2015 to 347 in FY2022. It now plans average seat growth over this period of 7.5% pa, up from 6% previously.
Nevertheless, two indicators are deteriorating. One is on time performance, which has been sliding since peaking at 88% in FY2012, although it remains healthy at 80%. The other is unit cost, which only fell in FY2015 due to currency movements and lower fuel prices. Excluding these factors, cost per seat increased by 3.5% and is expected to rise again in FY2016. With load factor above 91% and unit revenue growth harder to achieve, unit cost will be a priority for new CFO Andrew Findlay.
When talking of a "low cost airport" (LCA) the temptation is to consider only those that are situated some distance from the city they serve, are used only by budget airlines and general aviation, have few routes and handle relatively small numbers of passengers, usually in the category 0.5 to three million ppa. There are some well known examples where that is certainly not the case, for example KLIA2 in Kuala Lumpur (though that is a terminal, rather than an airport) and Don Mueang in Bangkok for example. The latter has become the leading LCA in the world as judged by passenger numbers. In Europe London’s Stansted Airport vies with it for that title.
But within Europe there are several other LCAs that punch well above their weight, or have the potential to, and which merit examination. Four of them are examined here. While most are thriving now, evolving airline models may threaten their comfort zone.
EasyJet: 3Q update signals another year of solid profit growth in spite of lower on time performance
EasyJet's 3Q update sent its share price up by 4% as investors cheered its better than expected revenue per seat performance, reflecting strength in the UK and on beach routes across Europe. Although this measure fell year on year - partly as a result of currency movements, but also illustrating some pricing weakness - the decline was less than expected. Moreover, the 4Q trend now appears to be positive.
Cost per seat, excluding currency movements, was slightly higher than expected, but this was the result of flight disruption caused by third parties, particularly French ATC strikes. Apart from this, there do not appear to be any cost surprises. One area of concern is easyJet's deteriorating on time performance statistics, although management insists that this is now improving.
Overall, and in spite of some challenges in the operational and macro environment, easyJet is in a relatively confident mood. Its FY2015 guidance sees pre-tax profit growth of around 10%, slower than the 21% achieved in FY2014, but still a solid performance.
Eastern/Central Europe offers significant opportunities to LCCs. The region's faster-growing, lower-wage economies are relatively under-penetrated by the low cost model, and by air travel in general, compared with Western Europe. Furthermore, outside Russia, Turkey and Greece, the region contains very few sizeable legacy airlines and even fewer in strong financial health.
Wizz Air and Ryanair, already established as the two leading airlines in Eastern/Central Europe (ex Russia, Turkey and Greece), look well placed to build further here. According to OAG data for the week of 13-Jul-2015, number one ranked Wizz Air is growing seat capacity by 25% year on year, while number two Ryanair's seat numbers in Eastern/Central Europe are up 22% from their level a year ago.
Wizz Air's recent aircraft order demonstrates its resolve to stay in pole position. However, breaking the region into its component markets, Ryanair often comes out ahead of Wizz Air in countries where they both compete. Whichever one of Europe's two lowest unit cost airlines can win the fight for cost leadership will likely be the long term winner in Eastern/Central Europe.
The Italian market continues in a state of flux. It looks like 2015 will join 2014 as a growth year, following contraction in 2012 and 2013. Alitalia has stabilised its total seat capacity after years of decline, but continues to lose market share to fast-growing rivals. Europe's three biggest LCCs - Ryanair, easyJet and Vueling - are pursuing what seems like relentless expansion across Italy, but Wizz Air is also building a presence.
Furthermore, the leading airlines in Italy continue to jostle for places in difference parts of the market. This is illustrated by easyJet's recent decision to close its Rome Fiumicino base from Apr-2016 and to redeploy aircraft through the expansion of bases at Milan Malpensa and Naples and at a new base at Venice Marco Polo.
Ryanair overtook Alitalia as the biggest airline in Italy by seats in 2013 and offers far more destinations. As it continues to improve customer service quality and to increase the proportion of primary airports in its pan-European network, Ryanair's position as market leader in Italy and the lowest cost producer in Europe will make it hard to beat.
At the Paris Airshow, Wizz Air signed a MoU with Airbus for the purchase of 110 Airbus A321neo aircraft, with deliveries to start in 2019, and uncommitted purchase rights over an additional 90 A321neo aircraft. The order is subject to a final purchase agreement and approval by the shareholders of Wizz Air, which listed on the London Stock Exchange earlier this year.
Such approval is typically forthcoming and the new aircraft should provide significant unit cost improvements. Nevertheless, Wizz Air's order is very large compared with its size today and follows large orders for narrow body aircraft in recent years for other leading European LCCs, including Ryanair, easyJet, Norwegian and Vueling (the latter as part of an IAG group order).
Norwegian has admitted that it may not be able to use all of its planned aircraft and Wizz Air's order now provides an opportunity to review the data on the number, and types, of narrow bodies on order in Europe. Narrowbody deliveries to Europe look set to rise, at a time of rising global deliveries. Success is not guaranteed for all. Meanwhile the expanding role of LCCs in both leisure and business markets continues to undermine the positions of legacy airlines on short haul routes.