EasyJet unveils plans to cut capacity growth
By Kevin Done, Aerospace Correspondent
Published: September 23 2004 09.48 | Last updated: September 23 2004 11.56

EasyJet, the UK low cost airline, is planning to cut its planned capacity growth next year from 24 to 16 per cent in the face of the continuing fierce price war being waged in the short-haul market in Europe.
It said on Thursday that it had enjoyed “improved trading” during its final quarter from July to September and raised its guidance for pre-tax profits in the current financial year from more than £52m ($93m) to more than £60m.
Yields or average fare levels were expected to remain under pressure in 2005, however. The decline in yields in the current quarter was in the region of 6-7 per cent.
Mr Webster said that “despite continuing volatility in fuel prices, pre-tax profit is now expected to exceed £60m, at least 16 per cent higher than 2003”.
The airline's share price has been trading close to its all-time low in recent months in response to two profit warnings delivered earlier this year.
In early trading on Thursday the share price fell by 2¼p or 1.6 per cent to 136¾p.
Mr Webster said that actions taken to improve the group's competitive position had begun to pay off. It had made changes to around 10 per cent of its network during the current financial year.
The group has started to rationalise the network as part of a detailed review of its plans for future capacity growth and the deployment of its rapidly growing fleet.
Since the beginning of August it has announced 16 new routes and nine new destinations. It has stopped flying to Zurich, the most expensive airport in its network, and has reduced capacity to Copenhagen and Amsterdam as part of the drive to reduce costs.
EasyJet said that details of its capacity plans would be announced on November 23 with its financial results.
To slow growth in the number of aircraft in its fleet from 24 per cent to 16 per cent next year, the airline is accelerating the disposal of some of its older, less efficient Boeing 737-300s. It is selling its six owned 737-300s. It leases a further 31.
The fleet is expected to total 108 aircraft by next September instead of 115.
It is unlikely to delay deliveries of its new Airbus aircraft in the coming 12 months, however, although this could happen in subsequent years.
EasyJet is growing rapidly, as it takes delivery of a stream of new A319s under a large order for 120 aircraft placed with Airbus at the end of 2002 for delivery to the end of 2007.
In the next financial year to September 2005 it is due to take delivery of 32 more A319s, at a rate of nearly three a month, on top of a fleet that will total 93 aircraft by the end of this month.
Mr Webster said that the airline's load factors, a measurement of seat occupancy, had remained in the high 80s during the summer.
Passenger numbers in the year to the end of September were expected to exceed 24.2m, up from 20.3m a year earlier. Turnover was expected to grow by around 16 per cent to £1.08bn from £932m.



EasyJet targets Republic of Ireland
By Kevin Done, Aerospace Correspondent
Published: September 23 2004 11.35 | Last updated: September 23 2004 11.35

EasyJet, the UK low cost airline, fired a warning shot at Ryanair, its Irish rival, on Thursday by moving for the first time into the Republic of Ireland with the launch of three routes from London Gatwick to Cork, Shannon and Knock.
EasyJet believes that Ryanair's routes from these three points to Stansted are among its most profitable.
Ray Webster, EasyJet chief executive, said: “These are our first services to the Republic of Ireland, where airfares, in many cases, have remained stubbornly high and generated consistently strong year-round returns for the incumbent airline.”
Ryanair flies from all three points to Stansted, while Aer Lingus, the Irish flag carrier, flies from Shannon and Cork to London Heathrow.
The move into the Republic of Ireland - EasyJet already has a significant presence in Northern Ireland in Belfast, where Ryanair is absent - shows how competition is intensifying between Europe's two biggest low cost airlines.
They have co-existed hitherto largely avoiding head-to-head rivalry on the same routes, but as their networks grow, so does the threat of direct competition.
Ryanair has recently announced plans to go into head to head competition on two of EasyJet's newest routes from London Stansted to Valencia and Almer“a in Spain. It has also moved aggressively in recent months to expand its presence at London Luton, EasyJet's headquarters airport.
“There is a big enough playground out there,” said Easyjet. The Ryanair moves to enter the two Spanish destinations, however, “seemed like a deliberate provocation,” he said.
In response, EasyJet said on Thursday it was also adding daily services to Valencia and Almer“a from Gatwick in addition to its already announced routes to these destinations from Stansted.
EasyJet now has 29 routes from Gatwick, more than from any other of its airports including Stansted and Luton, as it has moved to fill the vacuum at the airport left by the retrenchment of British Airways.
EasyJet said that it would start flying the Irish routes in ate January and the two new Spanish services from the beginning of March.