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Its annual accounts were released but were not approved by founder Stelios Haji-Iannou. In its accounts summary, the airline said forward bookings for the first quarter of the financial year are currently slightly ahead of the previous year, despite a “very difficult and highly uncertain economic outlook”. To counteract fuel costs it has reduced its aircraft utilisation for this winter from 11.6 hours to an average of nine hours a day.
“Winter capacity, measured in seats flown, will be broadly flat with last year but we expect competitor capacity on easyJet routes to fall by 7% in the same period,” it said. “The impact of higher fuel costs will be felt most sharply in the first half of 2009 and thus pre-tax margins will decline in the first half compared to the prior year.” For summer, Easyjet said yields will depend on the extent of the fall in consumer expenditure in Europe and the level of competitor capacity reduction in the market. “We expect to see further downsizing and consolidation of many weak competitors,” it said.
Easyjet said it will look to cut costs through negotiations with suppliers, reductions in overheads and improved crew efficiency. “For the full year at current fuel and exchange rates easyJet expects to be profitable,” it added.
Last week the airline’s founder Stelios Haji-Ioannou raised his stake in the firm to 26.9% and said it would reduce orders for new aircraft. Chief executive Andy Harrison said: “We recognise that economic conditions will be very difficult and easyJet is planning accordingly, which means focusing on offering customers great value, driving down controllable costs and preserving cash. “Unlike many of our competitors, our Airbus contract provides us with a flexible approach to fleet growth, which we intend to make full use of in such uncertain economic conditions."
Easyjet founder Stelios Haji-Iannou has refused to approve the airline’s annual accounts, saying he disagrees with some of accounting policies relating to its acquisition of GB Airways. In a statement attached to the airline’s financial results to the end of September, he said: "I am concerned about the application of certain of the accounting policies adopted by the board in a way that I believe is at odds with current commercial realities and the macro-economic climate. “Their implications only became obvious to me this year because of the acquisition of GB Airways."
Stelios, who owns 27% of the airline, believes the Board have been wrongly optimistic about the value of Gatwick landing slots that came for free with GB Airways. “Given the fact that many airlines have already ceased operating from Gatwick I believe that slots will be freely available and hence it will be more prudent not to create Gatwick slots as an "intangible asset" on our own balance sheet this year,” he said.
He also repeated demands for the payment of a dividend and for the appointment of two new non-executive directors of his choice, but he stressed that this was not part of an attempt to return to power. But he outlined his continued support for the airline’s chairman Colin Chandler. The rest of the airline’s Board said they were unanimous in their approval of the accounts.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
