EasyJet to launch five new routes from Rome Fiumicino, adding more pricing pressure on Alitalia

EasyJet (easyJet.com) (London-Luton) has announced it will launch five new routes from Rome Fiumicino. The five new routes are year-round services to Montpellier, Thessaloniki and Belgrade along with summer services to the popular islands of Menorca and Rhodes.

This move continues easyJet’s expansion plan in Rome which will see it increasing its capacity by a third. In December the airline announced two new routes – a daily service to Prague and thrice-weekly services to Nantes, both of which will begin operations this spring.

With the launch of these new routes, easyJet now operates 33 routes to and from Rome Fiumicino (new pressure on debt-ridden Alitalia), with a total of 154 routes operated to and from Italy. EasyJet opened a base at Fiumicino in 2009 and currently carries three million passengers each year to and from the airport – this is expected to rise to four million annually through its expansion plans. 96% of easyJet’s Italian customers say they would fly with easyJet again and one in four Italians now say EasyJet is their preferred airline.

EasyJet has also announced plans to launch a third base in Italy this year with a new base opening in Naples this March. The airline has also announced a 35% expansion of services to and from Catania in recent months. easyJet is the largest airline at Milan Malpensa, Venice and Naples. The airline currently has 25 aircraft based in Italy.

On the financial side, the airline issued this financial statement for its fiscal first quarter:

Drive demand, conversion and yields across Europe

Seats flown grew by 4.1% to 16.1 million. Passengers carried increased by 4.2% to 14.3 million, and the load factor increased by 0.1 percentage points to 88.7%.
Revenue per seat grew as expected by 3.4% on a reported basis to £55.71 per seat or by 1.4% at constant currency despite strong prior year comparators from post-Olympic trading in the UK and a challenging competitive environment. The growth in revenue per seat was driven by careful management of capacity, combined with the performance of allocated seating and the management of fees and charges. Revenue per seat also benefited from longer average sector lengths in the quarter.

Maintain cost advantage

Cost per seat excluding fuel increased by 3.0% on a reported basis and by 1.2% on a constant currency basis. This was driven by anticipated increases in charges at regulated airports and by increases in maintenance costs associated with the planned ageing of the fleet and increased proportion of leased aircraft.

Build strong number 1 and 2 network positions

EasyJet announced a new base in Naples which will be operational from Spring 2014 and the routes which will be flown from its new base in Hamburg.

Disciplined use of capital

Continued strong balance sheet with cash and money market deposits of £1.1 billion as at 31 December 2013.

With first half bookings in line with last year, easyJet expects to report a first half loss before tax of between £70 million and £90 million assuming normal levels of disruption compared to the £61 million loss reported in the first half of last year. Last year Easter fell on March 31 resulting in £25 million additional revenue in the first half of 2013. In this financial year Easter will fall in April.

Commenting on the results, Carolyn McCall, easyJet Chief Executive said:

“EasyJet has made a good start to the year. We have delivered revenue per seat growth in the quarter against a challenging competitive environment and the tough comparison with the prior year. The performance in the quarter demonstrates our continued focus on cost, progress against our strategic priorities and easyJet’s structural advantage in the European short-haul market against both the legacy and low-cost competition.

Our strategy of offering our customers low fares to great destinations with friendly service and a focus on cost control ensures that we can continue to deliver sustainable growth and returns for our shareholders.”

EasyJet (UK):