EasyJet SWOT: from green to amber for Europe's orange airline

EasyJet gained a new CEO, Johan Lundgren, on 1-Dec-2017. His arrival coincided with a green light for profit recovery: FY2018 results (year to Sep-2018) reversed the slide in underlying margins and return on capital that had overshadowed the previous two years. Trends in margins and return on capital tend to follow easyJet's revenue per seat, which grew in FY2018 after two years of declines.

Mr Lundgren knows, from his previous career in the travel and tourism industry, the importance of the customer experience and ancillary services in differentiating a business from its competitors and the importance of a digital strategy in supporting this. He wants easyJet to become the most data-driven airline in the world, building on the airline's already strong tradition in digital developments. EasyJet also benefits from a strong primary airport network.

Nevertheless, for low cost airlines, the price-driven commoditised end of the market is never far away, particularly in a period of increasing capacity growth. EasyJet expects revenue per seat to fall in 1H2019 - possibly a change from green to amber for continued margin improvement. Amber is not easyJet's favourite shade of orange.

Against this backdrop, this report considers easyJet's strengths, weaknesses, opportunities and threats.