EasyJet: Prepare for take off?

0
37

Budget airline EasyJet is expected to reverse a revenue drop it recorded last quarter.

It reported strong summer sales, with more bookings and fuller planes than this time last year.

Technology

The company’s new website design and algorithms have grown the conversion rate of visitors to customers, with the site better able to provide competitive ticket prices.

New planes which emit 15% less carbon could also help drive future profit growth.

No new heights

Pre-tax profits are expected to rise this year but aren’t going to hit 2015 levels. Also, revenue per seat is expected to fall. This could be fallout from recent terrorist attacks.

Fares no longer fare

Low fuel costs have also impacted profitability.

Cheap fuel has encouraged airlines to stockpile but its caused a price war: Easyjet and the rest of the industry have been adding more seats, bringing fares across the market down.

So whilst passenger numbers might increase significantly, profits will not.

Solutions?

EasyJet has been targeting businesses travellers who will spend more. However, it could steal the more profitable cost cutting RyanAir approach: land in obscure locations, charge for everything but the essential and keep wages low. This has enabled the Irish operator to sell seats at highly competitive rates.

Changing of the guard

With a new CEO imminent, EasyJet needs to watch itself: conventional airliners like Lufthansa are launching cheap operators and budget rivals are gaining the confidence to operate out of major airports.

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here