Yahoo Finance EasyJet to expand holiday business as it reduces losses
EasyJet is planning to expand its holiday business and set up a new loyalty scheme as it targets a 30% leap in profits this year.
The airline – boosted by the collapse of rivals such as Monarch and Alitalia last year – made a rare operating profit during the traditionally loss-making autumn and winter months. Its headline figure of £8m did not include heavy losses at its new Berlin Tegel operation, acquired from Air Berlin in January.
But even taking the impact of Berlin Tegel into account, pretax losses were down – from £236m in the first half of last year to £68m in the same period this year. Much of the improvement is down to the collapse of rivals, which enabled fares to rise by about 5%.
EasyJet carried almost 37 million passengers, up 3 million from last year, with total revenue jumping almost 20% to £2.2bn. The airline said the big increase in revenues was largely down to baggage fees, fuller planes across its network and the timing of Easter.
Chief executive Johan Lundgren said EasyJet Holidays would look to build up its market share, which was at a fraction of its potential. He said: “We have today 500,000 customers who book hotels with us, but 20 million of our customers are flying with us and booking hotels elsewhere.”
EasyJet Holidays is run by a third party, with Easyjet getting a share of revenues. But under new chief executive Garry Wilson, a former colleague of Lundgren’s at tour operator TUI, the airline will now negotiate contracts direct with hotels. Lundgren said this should mean cheaper, more flexible packages than rival holiday firms, whose planes fly to destinations once or twice a week.
He added that the airline would introduce a new loyalty programme next year. He declined to provide details, but said it would be “more affordable and convenient than the present schemes”. He denied fares were set to rise overall this summer, despite less capacity in the market: “They’re not necessarily higher: you’re going to see fares coming down in some places. We need to be sure we are priced competitively.”
EasyJet said its annual profits were likely to be between £530m and £580m, a third higher than 2016-17. Shares in the company rose 3% to £17.38. At the beginning of 2017, they were changing hands at just over £10.
