Significantly higher airport charges, staff shortages, chaos at airports. Anyone who thought the flight routine would soon return now that travel restrictions in Europe have been lifted are wrong.
For the British budget airline easyJet, a major user of Schiphol, all that hassle is again a setback. Although the company had to report a halved annual turnover (1.5 billion pounds, or 1.7 billion euros) and 858 million pounds net loss in November, the company turned out to be remarkably optimistic for fiscal year 2022/23. CEO Johan Lundgren spoke of “renewed strength” and “profitable growth” on the way to 2019 levels, before the corona pandemic.
It is not that far yet, says analyst Ruxandra Haradau-Döser of Kepler Cheuvreux. Thanks to the Easter holidays, traffic at Frankfurt Airport, one of the main European airports, recovered in April to 66 percent of pre-crisis levels. We think that’s pretty much at the lower end of market expectations. Airports with a lot of recreational traffic probably had a stronger recovery in April.”
According to Haradau-Döser, the improvement in the aviation sector is mainly due to flights full of holidaymakers and people who visit relatives abroad after a long time. But business traffic, she sees, is about half of what it was before corona.
Higher fuel costs
Together with higher fuel costs, inflation, the largely disappearance of Russian and Ukrainian passengers due to the war, and the months in which the omikron variant of the corona virus still caused travel restrictions, this is not doing the stock price of easyJet any good. The stock has lost about 18 percent this year.
Another factor is the significantly higher fees that easyJet has recently had to pay for using airports. Those airport charges will increase at Schiphol by almost 40 percent over the next three years. This led to a conflict with a number of users, including easyJet, but the judge also ruled in favor of the airport.
Still, CEO Lundgren’s optimism is based on something. „We are seeing a very strong revival of holiday flights in Europe, which is exactly a market where low budget carriers aiming for easyJet”, says Rico Luman, aviation sector economist at ING. “Although more expensive fuel makes the tickets more expensive, many people who had postponed their vacation are now willing to spend the money saved.” And this is benefiting easyJet, which last year flew from 153 airports in and near Europe.
Another problem is already emerging: the staff shortage at airports and airlines. It also led to forced cancellations at easyJet in April, and is expected to continue for months. Luman: “The necessary people have started doing something different because of corona. Getting this back up to standard is still a challenge. And the bookings are going fast.”
Analysts are curious about what will happen in the important summer months for easyJet. Last week, the company (more than 13,000 employees, 4,000 pilots, 7,000 cabin crew) came up with a creative solution: it is removing the back row of seats from its Airbus A319 fleet. That reduces the number of passenger seats from 156 to 150, but allows easyJet to fly with three instead of four cabin crew. For example, it complies with legal requirements, based on the number of seats instead of passengers on board. It doesn’t seem like a long-term solution.
EasyJet will present the half-year figures on Thursday.
A version of this article also appeared in the newspaper of May 16, 2022