easyJet freezes growth as losses double
easyJet CEO Carolyn McCall announced the LCC would freeze fleet growth plans over the next two winters after reporting a doubling of losses in 1HY2011 (Reuters/The Guardian, 10-May-2011). Ms McCall stated increasing fares to offset rising costs would sap demand, which means capacity discipline will be required to stem losses in the slower winter half. She added the airline is “planning for fuel prices to stay high”. Founder Sir Stelios Haji-Ioannou said the capacity freeze should allow easyJet to announce a special dividend, on top of a first shareholder payout due in 2012. Ms McCall said the LCC has sold about half its summer seats with stronger yields and added that there has been a marked turnaround in on-time performance.
The airline attributed the GBP153 million loss to increases in the price of fuel combined with a hike in passenger taxes and charges, including air passenger duty (APD) (ABTN, 10-May-2011). easyJet said GBP43 million of the pre-tax loss was due to increases in jet fuel costs, with a rise in “passenger taxation accounts” causing a further GBP21 million loss. Andrew McConnell, easyJet’s corporate affairs manager, warned that the government is considering implementing the EU’s Emissions Trading Scheme on top of APD from 01-Jan-2012. “There is a possibility for a short-haul passenger that APD could go up to GBP16, when at the moment it is GBP11,” he said. easyJet plans to launch a campaign aimed at changing the duty from a per passenger tax to a per aircraft tax, and reducing the tax once the ETS comes into force.