EasyJet Looking To Build Scottish Customer Base

May 16, 2013
The carrier last year secured a deal to provide travel for Scottish public-sector employees to London.

EASYJET is prepared to be patient as it seeks to build demand from business travellers for its routes in and out of Scotland, chief executive Carolyn McCall said, as the budget airline posted a reduced first-half loss of £61 million.

The carrier last year secured a deal to provide travel for Scottish public-sector employees to London, and the company hopes this will be a bridgehead to greater business from corporate Scotland.

Ms McCall said: There is definite pressure on budgets and that is working well for us.

She added: We see this as a long game. We are changing long-established behaviour within corporates.

Paul Simmons, regional manager for the UK at easyJet, added: We are aware we have to win the hearts and minds of our customers.

He said the company was seeking to do this by ensuring the correct frequency of flights and high levels of service.

EasyJet signed a deal with Expotel, the travel management company for the Scottish Government and other public-sector bodies, at the end of 2012.

Mr Simmons said: Part of our strategy is to get the public sector first because they are focusing on value, and then the corporates as well.

EasyJet carried a total of 26.6 million people in the six months to the end of March a rise of 5.3% on the same period last year.

Revenue was up 9.3% to £1.6 billion and its pre-tax loss for the period, which is always its weakest because it encompasses the quiet winter months, narrowed from £112m to £61m.

As competitors cut their capacity by 2.8% in the face of subdued consumer spending, easyJet said its 3.3% capacity increase to 30 million seats helped it narrowly beat City forecasts.

It expects more growth in its second half, when airlines typically make the bulk of their profits from holidaymakers.

Ms McCall said: The outlook for the second half of the financial year, combined with the strong reduction in first half losses, means easyJet expects to deliver improved returns and profitability for the year ending September 30.

As the tough market forced competitors to withdraw two million seats over the winter, easyJet shifted capacity to routes that drove the highest returns.

This saw it station two more aircraft at Edinburgh airport, taking its total to seven, and cementing its position as the largest airline in Scotland.

Ms McCall said the European airlines industry is due a shake-up that could benefit easyJet.

She said: I think what all the legacy carriers have seen is they cannot make money with their costs structures and labour costs doing short-haul Europe.

Their withdrawal, she admitted, was still a few years away .

EasyJet also told investors it is in the final stages of the commercial evalua- tion of the next generation of short-haul engine technology .

This could see it buy up to 200 new aircraft but could also pitch it against founder and major shareholder Sir Stelios Haji-Ioannou, who believes the cash would be better used on improving investor returns through increased dividends or share buybacks.

Easyjet currently has 210 aircraft and on average they are just four-and-a-half years old.

But the company believes it might need the new aircraft to replace existing planes that are approaching the 12 year mark at which it tends to retire them, as well as to expand its operations.

Ms McCall said that if the company does recommend a purchase it will talk to shareholders including Sir Stelios s easyGroup, and seek formal investor approval.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, commented: EasyJet has become an appealing story for investors, as it continues to attack some of its larger rivals head on.

Easyjet s shares closed up 94p or 8.32% at 1224p.

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