easyJet’s winter programme reflects considerable caution (which should please Sir Stelios!); Malpensa becomes 2nd biggest base after Gatwick

Image: easyJet at Milan Malpensa
In his letter rejecting the accounts Sir Stelios says: “We must focus on cash flow forecasts and not on carrying more passengers.” So, although 40% bigger at Milan Malpensa (shown), overall Sir Stelios should not be at all unhappy with the new winter schedule described by CEO Andy Harrison as “broadly flat.” (However, with 165 aircraft, compared to 137 last year, presumably some 25-30 units must be parked somewhere.)

It has been a high-profile week for Europe’s second biggest low-cost carrier easyJet. Its founder Sir Stelios Haji-Ioannou has stirred things up in the boardroom by increasing his shareholding in the company and then refusing to approve the airline’s annual accounts released this week. These accounts (for the year ending 30 September 2008) show that underlying profit before tax was down a relatively modest 36% to £123 million while revenue rose almost 32% as passenger numbers increased 17.3% to 43.7 million.

easyJet absorbs GB Airways in 2008

This summer easyJet completed its acquisition of London Gatwick based former British Airways franchise carrier GB Airways, helping the airline to generate an estimated growth in passenger numbers this calendar year of around 16%. Since 2002 the airline’s annual booked load factor has hovered between 82% and 85%.

Chart: easyJet traffic 2000-2008 Annual passengers (millions)
Source: easyJet investor relations reports

Back in 2002 easyJet’s size more than doubled partly as a result of swallowing Go, the London Stansted based LCC rival which had at one time belonged to British Airways, before being sold to 3i the venture capital firm. Since then easyJet’s passenger numbers have grown by between 11% and 22%, averaging 17% between 2003 and 2007. For the past five months easyJet has grown by on average 20% each month, but this rapid growth looks likely to end this winter according to anna.aero analysis of scheduled capacity.

Winter capacity unchanged; UK bases struggling
(apart from LGW)

According to schedule data provided by easyJet to OAG weekly capacity this winter is virtually the same as last year though movements are down around 1%. This apparent discrepancy can be partly explained by the continued phasing out of the 149-seat 737-700 in favour of more 156-seat A319s.

Many bases, especially in the UK have seen a reduction in capacity, while the Dortmund base in Germany has been abandoned altogether (although as with Ryanair at Valencia, closer examination reveals that Dortmund will still be served from other bases by aircraft based at those airports).

Image: easyJet in Germany
Not big in Germany any more (down 30%): In Sir Stelios’ letter rejecting the accounts, among arguments for the valuation of slots and aircraft, there was a nice nugget for network planners on profitability measured by route: “I believe a point-to-point low cost airline like ours must monitor profitability by one-way flight, by route and by aircraft. This would result in the division of the business into multiple ‘cash generating units’ in the same way as Ryanair.”
Chart: easyJet’s top 15 airports Weekly departures W08 v W07
Source: OAG schedule data for w/c 3 November 2008 and w/c 29 October 2007

Among the busiest 15 airports on easyJet’s winter network only three have recorded an increase in activity compared with last winter. However, when added together, capacity is only down 4% across these airports as the three that have grown have done so impressively. London Gatwick, easyJet’s biggest base, has seen capacity grow 18%, Milan Malpensa (now the second biggest base with 11 based aircraft) has grown 57% and Paris CDG has grown by 55%. Another new base, Lyon, has also seen capacity more than double in the last year.

Apart from Gatwick capacity across the rest of the UK is down over 20% at both Luton and Stansted, with Belfast, Bristol, Edinburgh and Liverpool all reporting double-digit declines.

Image: easyJet at new base in Lyon
Big in France – capacity at Paris CDG and the new base at Lyon has doubled, but across all UK airports it is down almost 10%.
Chart: Top easyJet country markets Weekly departures

Source: OAG Max Online for w/c 3 November 2008 and w/c 29 October 2007

As a result UK capacity this winter is down around 10% as is capacity in Spain. Switzerland is down almost 20% (at least until the ski season starts) and Germany almost 30%. More surprisingly maybe Poland and the Czech Republic, both synonymous with the boom in low-cost air travel are both down 30%.

On the positive side, capacity in Italy is up almost 40% thanks to the fast-growing Milan Malpensa base while France is up over 25% thanks to new bases in Paris CDG and Lyon. Capacity in Portugal is up 30% while Morocco’s capacity is up almost three-fold thanks to many new routes from French airports.

This winter easyJet is serving 27 countries compared to 21 last winter with Latvia (Riga) no longer served but Bulgaria, Cyprus, Gibraltar, Egypt, Finland, Malta and Sweden all new in the winter schedule.

Number of airports served increased by 15

Several airports have been ditched from the network since last winter including Bremen, Gdansk, La Coruna and Riga. Flights to Bucharest have moved from Baneasa to Otopeni. New airports this winter include Biarritz, Brindisi, Gibraltar, Helsinki, Hurghada, Malta, Manchester, Nantes, Rome Fiumicino, Sofia, Stockholm Arlanda and Tenerife. Some of these are legacies of the GB Airways takeover while others are new year-round markets ventured into in 2008.

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  1. Arthur Dent says:

    easyJet’s passenger numbers for November are up just 3.4% over the previous year. Considering that load factors were up around 3 percentage points this confirms that capacity this winter is virtually unchanged from a year ago. Ryanair reported passenger numbers up 11% to 4.32 million in November. easyJet carried less than 3 million meaning that Ryanair carried 45% more passengers in November than easyJet. As recently as September the difference was only 25%.

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