Is Easyjet facing an uncertain future?
 

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.

Yes very stable,very secure. End of discussion.
Next question.

Leo Hairy Camel is a complete menace and should be ignored....Discuss!!

While you're there Leo, I was looking at Ryanair's financials for 2004, 2005, and can't find the ASK and RPK numbers.
It is quite possible that I may have overlooked them, so could you please point me in the right direction.

Here's a way to both secure their future and blow the competition away.
Set up a Dublin base.
Result:
1. All ryanair pilots would switch over to Easy thus eliminating the competion.
Sure, O'leary would slash prices to run them off the route,but without any pilots to fly the pax, there won't be much repeat business.
2. Easyjet have crews to fill there arriving aircraft.

what a load of crap the reason easyjet makes money is there shafting all new entry pilots!

I was called for interview/assessment as a Non-Rated Direct Entry Pilot (with no expenses for travel/hotac) carried out satisfactory sim check, waited a week, then got told that they had decided not to take any Direct Entry Pilots, and that I was eligible for the TRSS (Type Rating Self Sponsor) - Oh and that would only cost me £23,000 (they even had the cheek to say we pay you it back over 5 yrs- BullS**T they take it out of your wages then give you it back!, hardly them paying for it) and to add further insult you dont get paid until you commence line training some 8 weeks later - do they think im mad!!!

That works out at about a 6% margin. I think thats inline with the rest of the industry.

What's more important is that they also managed to grow the company 25-26% and added 40 new routes in the last 12 months.

http://news.bbc.co.uk/1/hi/business/4574789.stm

Bentover,

I was told quite a few of your easyjet pilots were leaving to join Ryanair, particulalrly at Liverpool..?

Shags

A margin of 6% eh? BA's margin is is around that figure and their pushing for 10%. So it just goes to show that the LCC is not the way to make loads of money in the airline business as so many seem to believe.

Shag, I am a ryanair pilot, and I assure you , all would leave to join easy in a Dublin base.

Fockerplod
Sounds very similar to the Ryanair pilot scheme, except they dont get the oportunity to pay it back over the 5 years out of their wages. They too get no pay until line training and even pay their own HOTAC and transportation.

What is Ryanair's margin, and where is it published?

At last count....4

Hardly a stampede..

Apples and Oranges.
 

Page 9 of this may help illustrate the differences.

Ryanair is an easy situation.

You either agree or disagree with the moralistic stance taken by the company.

If you disagree and work for them you only have yourself to blame!

Mighty interesting read there Leo.
It does make you wonder if Ryanair is as creative with their financial presentations as they are with their geography?

Just had a look at the Easy financials page and whlist it grieves me to agree with The Camel, he does appear to be perfectly correct about revenue vs. cost per ASK.

oil price is the killer
 

The only way that any of the lowcosts are making money is the luck in hedging the oil price.
I think easy have a $60 cap and Ryanair got there "oil" at $47/barrel. The current market price is about $67 barrel. It is only a short term life line. Everyone is going to have to pay more for the air fare. It will only be a few pounds per pax but will hurt ryanair the most as £3 on a "99p" fare will make the biggest change. Maybe the wheelchairs users can be charged another £300, that to be fair will become an extra £3 surcharge.

The initial rise in fuel cost was offset by a rise in load factor by those who did not rise prices. This cannot rise much more as most sensable timed flights must be farely full and 6am takeoffs on midweeks must always have spaces.

Show me an airline taking 33 brandnew Airbuses in 12 months and still posting a net profit.....:hmm:; Until all airplanes are properly dispatched on the routes (replacing older 733´s partly) it definitely has an impact on cost. Remember, the airline is rolling over the fleet to 120 buses within 5 years. At no impact on costs ? Hardly....

Just my 2 cents :E

The shove that dare not squeak its name.
 

Well, not Airbuses perhaps, but does 27 brand new Boeing 737-800's this year count? Capacity 189 versus 156 on the minibus? What about 29 more in '06, and 25 more in '07. Then its 20 brand new –800’s every year until 2011, and yes, profit is forecast every year throughout.

Its not only the absorption of new aircraft acquisitions, TLT, but EZY's unhedged exposure to the 'perfect storm' of relentless upward pressure on the oil price, demand driven rather than supply driven this time, simultaneous to declining yields, crucial boardroom departures (not to mention one crucial return!), and a determined, capable competition....and no, I don't just mean Ryanair. Air Berlin are hot on your heels, as too are German Wings, exacerbating already under performing bases in Berlin and Dortmund. Don't forget Sterling and what about the FL Group's (Icelandair) 11.5% interest in the company?

The unthinkable seems plausible, all of a sudden. Remember Ansett?