Budget airline competition hits EasyJet
5 May 2004, LONDON - Shares in budget airline EasyJet dived Wednesday by almost a quarter after it cut its profit outlook for the year.
5 May 2004
LONDON - Shares in budget airline EasyJet dived Wednesday by almost a quarter after it cut its profit outlook for the year.
Europe's second-biggest budget carrier, which flies to eight destinations in Spain, said tough competition was keeping its fares under pressure, the BBC reported.
Chief executive Ray Webster said pricing by budget and full-service airlines continued to be "unprofitable and unrealistic".
His comments came as EasyJet reported interim pre-tax losses of EUR 38.22 million (GBP 27.3 million) down from EUR 67.34 million last year.
Pre-tax losses before goodwill and one-off items, including the costs of integrating EasyJet's recently-acquired budget airline Go into the business, came in at EUR 25.9 million - compared with EUR 34.16 million in the previous year.
However, the results were still worse than expected, and added to the downward pressure on EasyJet's shares.
The share price was down by nearly a quarter in early trade, before recovering slightly to stand down EUR 84.35 or 21 percent, at EUR 324.8 in mid-morning London trade.
EasyJet said its results "reflected the seasonality of the business and the exclusion of Easter".
The company usually has a weak first half because of reduced demand in autumn and winter ahead of the key summer holiday season.
Passenger numbers rose 15.9 percent to 10.8 million, while the average fare during the period was EUR 42.84, up 1.6 percent.
Chief executive Ray Webster said: "Given the increasingly competitive marketplace it is appropriate now to be cautious about the performance for the full financial year."
Separately, EasyJet said it had secured a financing agreement for 82 of the 120 Airbus jets it ordered in 2002.
The company added that it planned to introduce a further 38 routes to five new destinations, including Berlin and Budapest.
EasyJet currently operates 115 routes to 39 airports in 13 countries.
In Spain it operates out of Madrid, Barcelona, Malaga, Bilbao, Alicante, Ibiza and Palma.
Subject: Spanish news