Easyjet announces semester results, losses doubled
After Vueling, it’s easyJet’s turn to announce an under-performance for this semester. It would be wrong to call that “growing pains”, the british low-cost’s now huge and losses have few changes of being hardly as consequential as for Vueling.
Still, easyJet’s losses, following the law of large numbers, are far from Vueling’s 23 millions. This morning, the british low-cost reported pre-tax losses of up to 153 million pounds – about 175 million euros at current rates – over the past six months. That’s double forecast losses for this semester. The company defends this unforeseen spike arguing that December snow disruptions combined with hiking fuel costs can account for such an increase. In fact, according to easyJet, increase in oil prices alone account for 43 million pounds in those losses.
Still, contrary to Vueling, the company can defend itself to its investor with a tantalizing double figure passenger increase. In effect, it gained 12% more passengers over that same period – totalling up to 24 million passengers – which can be explained by organic growth and new route openings. Interestingly, few seem to take into account the fact that a few weeks ago easyJet actually increased its credit and debit card fees, doubling them in anticipation of rising fuel prices.
Where it gets paradoxical is that Carolyn McCall herself claimed those taxes had had an adverse impact on passengers. It remains to be seen whether the passenger quantity gained would compensate income lost from a decrease in fees, which is far sure from sure. As low-cost companies unveil the hit they’ve taken from increase in fuel prices, the most interesting will be to gauge who did best and who will seize the most marketshares.
