Spain and Canary Islands

easyJet sets course for record FY profits - and another clash with Sir Stelios...

easyJet’s 1H2013 pre-tax result improved by GBP51 million to a loss of GBP61 million. This puts it comfortably on course to achieve the current consensus forecast for record pre-tax profits of GBP410 million in FY2013. It may also be on another collision course with founder and largest shareholder Sir Stelios Haji-Ioannou over aircraft orders.

CEO Carolyn McCall believes easyJet can take further market share from non-LCCs on point-to-point routes. At its top 20 existing airports, where easyJet has 46 million seats (a share of 22%), she puts this potential additional market at 86 million seats. This analysis appears to pave the way for a large aircraft order after easyJet completes a review of its future fleet strategy later this year, although it insists that no decision has yet been taken.

This would not please Sir Stelios who said: “Good things happen to airlines that don’t order more aircraft.” Under Ms McCall's guidance easyJet's share price has more than doubled over the past year and not just because it didn't grow. It may be time for Sir Stelios to let go.

Portugal’s SATA seeks partners as it considers trans-Atlantic expansion, short-haul transformation

SATA, the ambitious and successful airline based in the Azores chain of islands west of Portugal in the Atlantic Ocean, is seeking a role amongst Europe’s establishment of smaller, niche carriers. Driving this, the airline’s entry into IATA’s billing settlement plan is a further step towards an expanded presence. SATA has built up a number of interlines and is looking to expand those and increase two-way codeshares.

Its focus is bringing tourists to the Azores and is therefore a niche long-haul operator but it still faces competition from European LCCs. It is hoping that a product unbundling will help it compete more effectively in short-haul markets while codeshares will increase long-haul traffic, which it may grow with additional widebodies or next-generation narrowbodies that can cross the Atlantic. It has favourable geography for connecting traffic in some markets and would like to increase this incremental revenue.

American-US Airways merger: the competitive impact on European carriers

The planned merger of AMR Corp, parent of American Airlines, and US Airways Group will have a small, but noticeable impact on European airlines via their North Atlantic networks. The merged AA-US Air will be the number four ranked airline group on the North Atlantic, an improvement on AA’s current sixth place. In terms of the alliances, if this merger and the Delta-Virgin Atlantic deal both complete, the three global alliances will have divided routes between Europe and North America almost equally between them, with little left for non-aligned carriers.

AA and US Air operate to Europe from different US hubs and there is no city pair route overlap between the two (so competition authorities seem unlikely to worry themselves on the grounds of these operations). However, when looking at overall markets between the US and individual European countries, the merger will have a competitive impact on European carriers’ North Atlantic activities, most notably Iberia and Alitalia, followed by Aer Lingus.

Iberia increases African presence with services to Accra and Nouakchott

Iberia’s planned service to Accra and Nouakchott will give Spain its first routes to the West African nations of Ghana and Mauritania. The services, to be operated with A319 and A321 equipment, respectively, will provide links for business travellers into the economic centres of each country. Iberia’s presence in Africa is strongest in the north and west, so the new services continue that strategy as the African market grows.