Latest news with #KentonJarvis
Yahoo
25-05-2025
- Business
- Yahoo
EasyJet pounces on Ryanair woes as budget rivalry reignites
EasyJet is poised to rekindle a long-running battle for dominance in discount travel as it prepares to swap 80 of its smallest jets for bigger and more efficient models. Kenton Jarvis, the carrier's chief executive, said that retiring Europe's largest fleet of Airbus A319s – including some aircraft which are 20 years old this year – would help easyJet cut costs faster than arch-rival Ryanair. The A319s have just 156 seats, compared with up to 235 in the newer Airbus planes that are due to replace them. While Ryanair is also renewing its fleet, the process has been hampered by a production crisis at Boeing. Crucially, even when the Irish airline does receive new aircraft, they will arrive with only 10 more seats than the planes they are replacing. In a presentation last week, Mr Jarvis highlighted the 'upgauging' of the easyJet fleet to bigger jets as a key driver in his attempt to lift the company's annual pre-tax profits above £1bn. He said earnings would also be boosted by efforts to cut losses in the quieter winter months and by growth in the package holiday market, which has enjoyed a revival since Covid, via the group's in-house easyJet holidays brand. Ryanair made a foray into package holidays in 2016 but terminated it after just a few months. Last week, Michael O'Leary, the firm's chief executive, said in an earnings update that a relaunch now would distract from its own fleet expansion plans. Mr Jarvis said that closing the gap in average seat numbers with Ryanair would hand the initiative to easyJet following decades of its competitor claiming an edge in the vital measure of costs per passenger. Replacing an A319 with a modern A320 Neo adds 30 seats – a capacity increase of almost one fifth. 'We have 19pc more seats but still only two pilots at the front. You still only have four cabin crew on board, because you need one per 50 seats,' Mr Jarvis said. 'The engineering costs don't go up because there are still two engines on it. The navigation costs don't really move because that's the cost of air traffic control moving a tube of metal through the sky. So much of your cost base has just become 19pc more efficient,' he added. Factor in efficiencies from the A320's modern engines – the 'Neo' designation stands for 'new engine option' – and fuel burn per customer improves even more dramatically, coming in about a quarter lower. Mr Jarvis said: 'When you fly the A319 from Manchester to Paris, say, it's very frustrating because it burns more fuel than when you use the A320neo, which has more customers on.' Upgrading to newer Airbus models could save anywhere between £10 and £16 per seat. Taking into account the proportion of the overall fleet to be replaced, Mr Jarvis said he expected easyJet to be £3 per seat better off once all 82 A319s had been replaced. He added: 'To put that into perspective, we don't even make £10 a seat profit right now. So really it's an enormous improvement.' Mr Jarvis said the chance to radically increase the average size of its planes was 'unique to easyJet' and a legacy of ordering smaller aircraft than Ryanair and other carriers earlier in its history. EasyJet started out in 1995 as a Boeing operator but switched to Airbus in 2002 with an order for 120 A319s after Sir Stelios Haji-Ioannou, the airline's founder, secured a discount that undercut the US manufacturer by 30pc. While it was a significant saving and suited to demand at the time, the planes were smaller than the Boeing 737-800s that Ryanair was acquiring. Mr Jarvis said easyJet 'went a bit ex-growth for a number of years' as Sir Stelios pushed back against further purchases. EasyJet ultimately switched to the A320 for subsequent orders, but has so far retired barely a third of its A319 fleet. Two thirds of those planes will now be stood down by 2028. With no smaller jets to replace, Ryanair's ability to increase the size of its aircraft is limited. The Irish airline is in the process of switching from the 737-800 to the equivalent Max 8, though Mr O'Leary was able to use its clout as Boeing's biggest European customer to secure a higher-density version with 197 seats, around 10 more than standard. 'Ryanair never had the Boeing equivalent of the A319. So when they go to the Max 8 they're not really getting any more seats. They've designed what Michael calls the 'game-changer', but it's not that much different,' Mr Jarvis said. Deliveries to Ryanair were also delayed by the 20-month grounding of the Max 8 following two fatal crashes and the more recent production slowdown ordered by regulators after a door plug blew out of an Alaska Airlines jet. Ryanair has 150 orders for the larger Max 10 variant, Boeing's answer to the A321neo, but that plane may not enter service until 2027 or 2028, up to eight years later, as a result of the safety and production crises. Mr Jarvis said cost improvements from ditching older models would only be realised if easyJet was able to sell the additional capacity at the same revenue per seat as before. He said: 'I think we can because we are in a period where there just isn't so much supply in the market as the manufacturers struggle to increase build rates.' Mr Jarvis said the carrier was on track for a record profit in line with analyst estimates of about £700m in the year through September as summer bookings surged. Bigger planes will also play to easyJet's focus on major airports, where new operating slots during the busiest periods are rare and expensive to secure. He said: 'This is a nice way of increasing capacity without needing to conjure up new slots. You have more passengers coming through the terminals because you have larger aircraft.' Adding dozens of extra seats per flight will be a lucrative proposition at airports such as Geneva and Milan Linate, where average fares are higher than at the less expensive airports favoured by Ryanair. EasyJet, which has a fleet of 355 planes and is due to take delivery of 291 through 2034, is also using the additional range of the bigger jets to extend its network beyond Europe, offering more flights to North Africa and as far afield as Cape Verde. Ryanair said it remained by far Europe's most efficient airline and said the gap has widened in recent years. The Dublin-based carrier said it had per-passenger costs of €35 (£29) last year, excluding fuel. A spokesman said that compared with €85 (£71) at easyJet, partly as a result of the fees charged by major airports, and double that again at full-service operators IAG, which owns British Airways and Lufthansa. Wizz Air, which benefits from lower staff expenses in Eastern Europe, had the second-lowest cost base, according to Ryanair's calculations. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Sign in to access your portfolio
Telegraph
25-05-2025
- Business
- Telegraph
EasyJet pounces on Ryanair woes as budget rivalry reignites
EasyJet is poised to rekindle a long-running battle for dominance in discount travel as it prepares to swap 80 of its smallest jets for bigger and more efficient models. Kenton Jarvis, the carrier's chief executive, said that retiring Europe's largest fleet of Airbus A319s – including some aircraft which are 20 years old this year – would help easyJet cut costs faster than arch-rival Ryanair. The A319s have just 156 seats, compared with up to 235 in the newer Airbus planes that are due to replace them. While Ryanair is also renewing its fleet, the process has been hampered by a production crisis at Boeing. Crucially, even when the Irish airline does receive new aircraft, they will arrive with only 10 more seats than the planes they are replacing. In a presentation last week, Mr Jarvis highlighted the 'upgauging' of the easyJet fleet to bigger jets as a key driver in his attempt to lift the company's annual pre-tax profits above £1bn. He said earnings would also be boosted by efforts to cut losses in the quieter winter months and by growth in the package holiday market, which has enjoyed a revival since Covid, via the group's in-house easyJet holidays brand. Ryanair made a foray into package holidays in 2016 but terminated it after just a few months. Last week, Michael O'Leary, the firm's chief executive, said in an earnings update that a relaunch now would distract from its own fleet expansion plans. Mr Jarvis said that closing the gap in average seat numbers with Ryanair would hand the initiative to easyJet following decades of its competitor claiming an edge in the vital measure of costs per passenger. Replacing an A319 with a modern A320 Neo adds 30 seats – a capacity increase of almost one fifth. 'We have 19pc more seats but still only two pilots at the front. You still only have four cabin crew on board, because you need one per 50 seats,' Mr Jarvis said. 'The engineering costs don't go up because there are still two engines on it. The navigation costs don't really move because that's the cost of air traffic control moving a tube of metal through the sky. So much of your cost base has just become 19pc more efficient,' he added. Factor in efficiencies from the A320's modern engines – the 'Neo' designation stands for 'new engine option' – and fuel burn per customer improves even more dramatically, coming in about a quarter lower. Mr Jarvis said: 'When you fly the A319 from Manchester to Paris, say, it's very frustrating because it burns more fuel than when you use the A320neo, which has more customers on.' Upgrading to newer Airbus models could save anywhere between £10 and £16 per seat. Taking into account the proportion of the overall fleet to be replaced, Mr Jarvis said he expected easyJet to be £3 per seat better off once all 82 A319s had been replaced. He added: 'To put that into perspective, we don't even make £10 a seat profit right now. So really it's an enormous improvement.' Mr Jarvis said the chance to radically increase the average size of its planes was 'unique to easyJet' and a legacy of ordering smaller aircraft than Ryanair and other carriers earlier in its history. EasyJet started out in 1995 as a Boeing operator but switched to Airbus in 2002 with an order for 120 A319s after Sir Stelios Haji-Ioannou, the airline's founder, secured a discount that undercut the US manufacturer by 30pc. While it was a significant saving and suited to demand at the time, the planes were smaller than the Boeing 737-800s that Ryanair was acquiring. Mr Jarvis said easyJet 'went a bit ex-growth for a number of years' as Sir Stelios pushed back against further purchases. EasyJet ultimately switched to the A320 for subsequent orders, but has so far retired barely a third of its A319 fleet. Two thirds of those planes will now be stood down by 2028. With no smaller jets to replace, Ryanair's ability to increase the size of its aircraft is limited. The Irish airline is in the process of switching from the 737-800 to the equivalent Max 8, though Mr O'Leary was able to use its clout as Boeing's biggest European customer to secure a higher-density version with 197 seats, around 10 more than standard. 'Ryanair never had the Boeing equivalent of the A319. So when they go to the Max 8 they're not really getting any more seats. They've designed what Michael calls the 'game-changer', but it's not that much different,' Mr Jarvis said. Deliveries to Ryanair were also delayed by the 20-month grounding of the Max 8 following two fatal crashes and the more recent production slowdown ordered by regulators after a door plug blew out of an Alaska Airlines jet. Ryanair has 150 orders for the larger Max 10 variant, Boeing's answer to the A321neo, but that plane may not enter service until 2027 or 2028, up to eight years later, as a result of the safety and production crises. Mr Jarvis said cost improvements from ditching older models would only be realised if easyJet was able to sell the additional capacity at the same revenue per seat as before. He said: 'I think we can because we are in a period where there just isn't so much supply in the market as the manufacturers struggle to increase build rates.' Mr Jarvis said the carrier was on track for a record profit in line with analyst estimates of about £700m in the year through September as summer bookings surged. Bigger planes will also play to easyJet 's focus on major airports, where new operating slots during the busiest periods are rare and expensive to secure. He said: 'This is a nice way of increasing capacity without needing to conjure up new slots. You have more passengers coming through the terminals because you have larger aircraft.' Adding dozens of extra seats per flight will be a lucrative proposition at airports such as Geneva and Milan Linate, where average fares are higher than at the less expensive airports favoured by Ryanair. EasyJet, which has a fleet of 355 planes and is due to take delivery of 291 through 2034, is also using the additional range of the bigger jets to extend its network beyond Europe, offering more flights to North Africa and as far afield as Cape Verde. Ryanair said it remained by far Europe's most efficient airline and said the gap has widened in recent years. The Dublin-based carrier said it had per-passenger costs of €35 (£29) last year, excluding fuel. A spokesman said that compared with €85 (£71) at easyJet, partly as a result of the fees charged by major airports, and double that again at full-service operators IAG, which owns British Airways and Lufthansa. Wizz Air, which benefits from lower staff expenses in Eastern Europe, had the second-lowest cost base, according to Ryanair's calculations.
The Independent
23-05-2025
- The Independent
EasyJet promises ‘better resilience' ahead of difficult summer
Britain's biggest budget airline, easyJet, has revealed a raft of measures to try to protect summer passengers from disruption caused by air-traffic control constraints, strikes and bad weather. The carrier has adjusted crew rosters to reduce the risk of pilots and cabin crew going 'out of hours'. It is 'sharpening' the time spent on the ground between the arrival and departure of a flight. And easyJet has bought key spares for its fleet in advance. Kenton Jarvis, easyJet's chief executive, said air-traffic control (ATC) performance in Continental Europe had been 'poor' for the last few months. 'The French are probably the worst as usual, with Germany and the Greeks competing for a second spot on the deterioration in service, but this is something we anticipated.' Holidaymakers flying in Europe face the worst air traffic control issues in a quarter of a century this summer – with 30 million UK air passengers set to be delayed between June and August. 'We've got better tools, so we've become more sophisticated in our use of the simulation tool that we call SkySym,' Mr Jarvis said. 'That allows us to put the schedule in; put the number of delay minutes we anticipate – which is a bad summer; and then see how it performs, and address the pinch points. 'If we're going to have difficult air traffic control delays then our ability to recover them with sharper 'turn times' is important.' EasyJet schedules its aircraft to be stationary on the ground for as little as half-an-hour between flights. 'We're really sharpening our turn times again. It might be harsh to say we lost a bit of focus on this. But we're seeing good results from refocusing on it.' The easyJet boss said on-time performance in April was 2 per cent up on the previous year, and over the four days of Easter was 13 per cent better. But with extra pressure on air-traffic control, summer storms and possible strikes, the airline has put more slack in the system. 'We've split some of the more problematic crew pairings – where you want to do them because it helps maximise the productivity of the crew, but if you run up an hour's worth of ATC delay in the day, then the crew go out of hours and you're left cancelling flights. 'We've put more buffer in the system and we've split some of the most problematic crew pairings from last year. 'We don't know when the summer storms start, and that's difficult to cope with. But we know we've got better resilience and we've built a bit of slack in on top.' Extra spare parts have been bought and deployed around the airline's network because 'you can't run a just-in-time model any more and expect to receive the parts in quick order – you have to invest in having them.' Mr Jarvis said strikes by refuelling staff at Gatwick working for Redline Oil had not caused any problems for easyJet. 'We were able to do pre-fuelling and not rely so heavily on the on-the-day service, and therefore it didn't really impact us at all.' Looking ahead to possible further disruption, he said: 'It's down to whether the air traffic controllers decide they want to put a strike in, and we'll have to wait to see if they do that. 'But I'm hoping the resilience measures we have – and the fact that they should protect the overflying and just really doing it on a local level if it's in France – should help.'
Yahoo
23-05-2025
- Business
- Yahoo
easyJet PLC (EJTTF) (H1 2025) Earnings Call Highlights: Navigating Losses and Strategic Growth
Group Loss: GBP394 million for the first half, in line with consensus. Impact of Easter: Valued at GBP50 million, affecting financial results. Q1 Performance Improvement: Improved by GBP65 million, more than halving losses. Capacity Investments: Added 8% more seats, increased ASKs by 14%. Crew Productivity: Improved by 6%. Aircraft Utilization: Improved by 5%. Unit Costs (CASK ex fuel): Reduced by 4%. Fuel Costs: Reduced by 8%. EasyJet Holidays Passenger Growth: Expected 25% increase. New Aircraft: Took ownership of nine A320 family neos. Average Seat Gauge: Increased by 1% to 181 seats. New Bases Opened: Milan Linate, Rome Fiumicino, and Southend. On-Time Performance: Improved by 1% in the first half, 2% in April. CSAT Scores: Improved year on year for airport experience. Dividend: Paid 20% of profit after tax for the half. Asset Book Value: GBP4.6 billion, expected to grow by 60% by full year '28. Warning! GuruFocus has detected 4 Warning Sign with EJTTF. Release Date: May 22, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. easyJet PLC (EJTTF) improved its Q1 performance by GBP65 million, more than halving its losses compared to the previous year. The company reduced its unit costs (CASK ex fuel) by 4% and fuel costs by 8%, with expectations for continued reductions in the second half. easyJet Holidays is on an excellent growth trajectory, expecting a 25% increase in passengers. The company has added new bases in Milan Linate, Rome Fiumicino, and Southend, with plans to open a base in Newcastle, enhancing its network. The company is focused on capital allocation, ensuring high returns on capital and maintaining a strong investment-grade balance sheet. easyJet PLC (EJTTF) reported a group loss of GBP394 million for the first half, in line with consensus but still a significant loss. The second quarter saw an increase in losses, attributed to necessary preparations for the summer season, including recruitment and training. Capacity growth is constrained due to delays from OEMs like Airbus and Boeing, affecting summer seat availability. The company faces challenges with air traffic control disruptions, which have deteriorated year-on-year. New routes and bases require price stimulation initially, impacting short-term profitability as they mature over a two to three-year period. Q: Can you provide more details on how the Easter impact moved from GBP30 million to GBP50 million and discuss summer pricing? A: The Easter impact increased due to stronger-than-anticipated demand in April. We saw a need for price stimulation in March, particularly for routes to the Canaries. For summer, we are ahead on load factor, with a 2.2% increase, and fuel costs are decreasing, which supports a positive outlook. (Kenton Jarvis, CFO) Q: How are the new bases performing, and what is the proportion of seats sold through third-party channels? A: Southend has performed well, with 25% of traffic from easyJet Holidays. Milan Linate and Rome Fiumicino are promising but required late investments. Regarding distribution, UK Beach routes have 65% direct sales, 18% indirect, and 17% through easyJet Holidays. (Kenton Jarvis, CFO; Sophie Dekkers, CCO) Q: With the current booking trends, do you see value in adjusting yield strategies for the peak summer? A: Our commercial department continuously evaluates the trade-off between yield and load factor. We are in a strong position and will optimize performance for another record summer. (Kenton Jarvis, CFO) Q: Are there any plans for a loyalty program similar to legacy airlines? A: Loyalty is important to us, and we have easyJet Plus with growing membership. We are exploring app-centric approaches for deeper customer relationships, but there are no immediate plans for a traditional loyalty program. (Kenton Jarvis, CFO) Q: How are you addressing high other costs compared to peers, and what impact will this have on future profitability? A: We have seen a 4% improvement in CASK ex-fuel due to increased capacity. Maintenance costs are slightly up due to lease extensions and inflation. We are focused on closing the cost gap with peers through capital allocation and digital investments. (Jan De Raeymaeker, CFO) Q: What is the outlook for hotel bed supply in new longer route markets? A: We are positive about hotel bed supply, with strong relationships with hoteliers who appreciate our ability to fill beds year-round. We have seen increased approaches from hoteliers offering more beds, which supports our growth. (Garry Wilson, CEO of EasyJet Holidays) Q: Have you observed any changes in demand due to tariff uncertainties, and what is your stance on cash returns to shareholders? A: We have not seen significant changes in demand due to tariffs. Our cash position is strong, with GBP3.6 billion in cash and GBP5.3 billion in total liquidity. We maintain a 20% dividend policy and focus on fleet modernization. (Kenton Jarvis, CFO; Jan De Raeymaeker, CFO) Q: How are you addressing the Spanish government's challenge to ancillary fees, and what is the demand outlook in Europe? A: We are appealing the Spanish fine, as it contravenes EU law. Ancillary fees are crucial for managing capacity and customer satisfaction. Demand in Europe is strong, with load factors ahead of last year. (Kenton Jarvis, CFO; Sophie Dekkers, CCO) For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Scottish Sun
22-05-2025
- Business
- Scottish Sun
Budget airline EasyJet heading towards record annual profits of £703million despite tough winter
EasyJet also plans to reopen its Newcastle base RAKE IT EASY Budget airline EasyJet heading towards record annual profits of £703million despite tough winter Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) EASYJET is cruising towards record annual profits of £703million. The budget airline welcomed 18.2million passengers in the first three months of 2025 — up 8 per cent on the same period a year ago. Sign up for Scottish Sun newsletter Sign up 4 Easyjet is cruising towards record annual profits of £703million Credit: Reuters 4 The firm welcomed 18.2million passengers in the first three months of 2025 Credit: Getty EasyJet also plans to reopen its Newcastle base, which was shut in 2020 during the pandemic. It made losses of £394million for the six months to the end of March, after a hard winter and late Easter. But that was a 'slight improvement' of about £50million when the later timing of Easter was taken into account. There was good news from the firm's package holiday arm which made pre-tax profits of £44million in the six-month period, a 42 per cent increase year-on-year. Total revenue during the period climbed 8 per cent to £3.53billion, comprising increases of 5 per cent from passenger sales, 7 per cent from ancillary and 29 per cent from its holidays arm. Ancillary revenue, from extra charges for cabin baggage, priority boarding or food, came in at £978million by the end of the period, up from £911million a year ago. Chief executive Kenton Jarvis said: 'We remain focused on delivering another record summer this year, expecting to drive strong earnings growth as we progress towards our target of sustainably generating over £1billion of annual profit before tax.' In further good news for the North East, easyJet said it would launch the new base at Newcastle International next spring, creating 130 jobs for pilots, crew and engineers. Airport boss Nick Jones said the move was 'a significant boost to the local economy by creating high-quality jobs and attracting more inbound visitors to the region'. 4 EasyJet plans to reopen its Newcastle base, which was shut in 2020 during the pandemic Credit: Alamy EasyJet cabin bag rules explained - and which items you can take for free DISCOUNTDOWN DISCOUNT store Poundland should be sold by September, according to owners Pepco. The firm hopes to flog the 818-branch chain for just £1 so it can focus on its more profitable European chains. Poland-based Pepco, which bought the business in 2016, has struggled to make it profitable and revenues fell 6.5 per cent for the six months to March. Boss Stephan Borchert called trading 'challenging'. Potential buyers are believed to include US firm Gordon Brothers, which used to own Laura Ashley. MITCHELLS & BUTLERS, the owner of Toby Carvery, said pre-tax profit rose 24 per cent to £134million in the last six months thanks to its Harvester and All Bar One chains. It warned costs are rising but they would be offset by rising sales. BT INCOME CALL TELECOMS giant BT has warned that earnings will be flat this year as it concentrates on cost-cutting and plans to refocus on its UK business. It has already saved £900million and cut its workforce by 8 per cent as part of plans to axe up to 55,000 jobs by 2030. Chief executive Allison Kirkby is leading a revamp of the business since taking over last year and is considering flogging or breaking up its international arm. Underlying earnings rose 1 per cent to £8.21billion in the year to the end of March. PROFITS WILT FOR BLOOMS SHARES in Harry Potter publisher Bloomsbury fell 17 per cent yesterday after it revealed weaker profits, despite selling more books in the last year. Pre-tax profits slipped by 22 per cent to £32.5million for the year to the end of February. 4 Shares in Harry Potter publisher Bloomsbury fell 17 per cent Credit: Bloomsbury Boss Nigel Newton remained upbeat, saying the business is 'monetising academic content through AI deals in our authors' best interests'. It benefited by expanding its consumer portfolio, which includes genres like fantasy, cosy crime and cookery, and it has a strong release list for the new financial year. Revenues in its non-consumer division, which publishes academic publications, grew 12 per cent to £105million. Bloomsbury snapped up US publisher Rowman & Littlefield last year. Mr Newton said: 'Trading for 2025/26 is expected to be in line with current consensus expectations.' DESKING HOTS UP PROPERTY giant British Land said staff are flocking back to the office in central London, with midweek occupancy rates returning to pre-pandemic levels. It said rents in the capital had rocketed in the last year, helping it post a 4 per cent rise in profits to £279million. Earlier this week, HSBC bosses told staff they could lose bonuses unless they were back behind their desks for at least three days a week. Unlock even more award-winning articles as The Sun launches brand new membership programme - Sun Club.
