Skift Take

It's not a great time to be running a European short-haul airline, but EasyJet is trying to make the best of it. While growing its holiday and business travel offerings is probably a smart move, it's difficult to see them making much of a difference if the economic climate keeps getting worse.

Brexit and the wider economic slowdown in Europe are making things tough for low-cost carrier EasyJet as the airline tries to navigate through a tricky summer period.

The Luton-based firm said revenue per seat was likely to fall in the second half of its financial year but added that changes it had made to improve its resilience to deal with strikes and air traffic control delays would help.

EasyJet’s pretax loss widened from $23 million (£18 million) to $351 million (£275 million) for the six months to the end of March on the back of higher costs, including fuel-price rises and the drone incident at its key Gatwick base. Total revenue increased 7.3 percent to $3 billion (£2.3 billion).

Despite the myriad challenges EasyJet has maintained its full-year pretax profit guidance of $555 million (£435 million). The company’s share price rose slightly following the results announcement on Friday.

“We are well-equipped to succeed in this more difficult market through a number of short-term customer and trading initiatives for the summer; measures to improve our operational resilience; and by focusing on what is most important to customers — value for money, punctuality, and great customer service,” CEO Johan Lundgren said.

Other European airlines have painted a similarly gloomy picture, with Lufthansa recently announcing it was halting capacity expansion at its low-cost carrier Eurowings.

“The results make the best of a difficult summer environment for short-haul leisure in Europe,” said Daniel Roeska, an analyst at Bernstein.

Loyalty Focus

With such a wretched operating environment, EasyJet is pinning its hopes on its new strategy — called “Our Plan” — which it hopes will bring it success over the coming years.

Part of this means building up its loyalty offering and bringing in additional features, such as an enhanced holiday product and a bigger focus on business passengers.

Having sourced two technology partners — Valtech and Atcore — to build the website and distribution platform, EasyJet plans to launch its holidays business at the end of 2019, selling for summer 2020.

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Tags: brexit, earnings, easyjet, europe

Photo credit: An EasyJet aircraft taking off. The carrier has maintained its profit guidance. Rob Hodgkins / Flickr

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