Most airlines in Europe make losses in the winter. It was a sign of the strength of easyJet's business model and the success of CEO Dame Carolyn McCall's leadership that its 1H loss (Oct to Mar, coinciding with the winter) narrowed every year from FY2011 until it made a profit in 1H2015. Alas, its return to loss in 1H2016 puts it back among most airlines in this respect.
The airline's FY2016 outlook is slightly more positive; all its profits come in 2H, the summer, and modest earnings growth is expected. Moreover, its high margins set it apart from most airlines, as does its plan to pay 50% of net profit as dividends to shareholders.
The deterioration in easyJet's 1H result was due to falling unit revenue – a persistent problem. In spite of lower fuel prices, cost per seat did not fall fast enough in 1H to offset this. Revenue per seat was adversely affected by geopolitical events and currency movements, but it is becoming increasingly apparent that easyJet faces a challenge to grow its revenue per seat. Its load factor is already about as high as it can get, and easyJet is currently unable to drive pricing up.
To access CAPA Premium Analysis you need a CAPA Membership
Your window into the latest insights
CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.
Big picture strategic view
Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.
The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.
Customise your Alerts
CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.
I'm very impressed by the factual and detailed analysis CAPA is always doing.- CEO, Airline Member
Phone: +61 2 9241 3200 | Email: email@example.com