Whilst the recent fiesta of bitch slapping between
Easyjet and
Ryanair has been an amusing diversion, I can't help but wonder if things aren't all that bright in Orangeland. I know full well that margins in our business are razor thin at the best of times, but Easyjet reported a cost per available seat kilometer (ASK) of 4.04 pence in their '04 full year results compared with revenue per ASK of just 4.29 pence. Slim, yes, but in the right direction. Interim results for '05, however, show a cost per ASK of 3.96p and a revenue per ASK of 3.81p. This is a loss making airline. With 3925 staff and 92 aircraft, or 42.7 employees per aircraft, this would seem to unfavourably compare with Ryanair's 2604 employees and 91 aircraft, or 28.6 employees per aircraft. Add to this the fact that EZY are largely unhedged for the rest of the financial year, the price of
oil is on steroids and likely to reach US$80 per barel by the end of the year, are Easyjet a viable company in the current trading environment? Is the future bright? Is the future Orange?
Discuss.