There will be more airline consolidation in Europe this winter as rising fuel costs continue to bite, according to easyJet’s chief executive Johan Lundgren.
Speaking at industry conference World Travel Market in London, he said that this year has been characterised by changes to the landscape following the high-profile failures of Monarch, Air Berlin and more recently Primera Air.
Other carriers to feel the pinch in recent weeks have include Cobalt Air, VLM and Small Planet Airlines.
easyJet was one of the main beneficiaries of Air Berlin’s demise, completing a €40m acquisition of its assets at Berlin Tegel Airport in December 2017 and launching flights from the new base less than a month later.
“It has definitely been a game-changer,” Lundgren said, adding that the deal provided an excellent opportunity to grow in one of the airline’s four core markets. “If you look at our 29 bases now, we have a number one or number two position in 24 of them.”
He added that easyJet’s ability to integrate Air Berlin’s assets so quickly had been an “extraordinary feat” and demonstrates that the airline’s model means it is able to react quickly to market opportunities.
In late October, easyJet submitted a revised bid for Italy’s Alitalia, which has been under special administration for 18 months. The airline made its latest submission “in response to the new government's ongoing sales process”.
Lundgren said easyJet would have to “wait and see” how the bid progresses and affirmed that any potential takeover would have to make sense strategically and commercially.
“But if it doesn’t work out we feel very confident of our ability to compete in the Italian market,” he said.
Looking at the wider industry in Europe, Lundgren said he expected more airline consolidation this winter, primarily because of the rising cost of fuel and pressure caused by the increase in EU 261 claims for delayed flights.
He added that Icelandair’s proposed acquisition of low-cost rival WOW air had not come as a surprise.
“You can never determine timings, but I don’t think it’s that surprising,” he said. “They probably thought it was better to get one functional rather than keep competing each other to death.”
If approved by shareholders, the airlines will continue to operate under separate brands.
In October, Ryanair’s chief executive Michael O’Leary also predicted more carriers to fail this winter, saying: “Mostly we think one or more of the two Scandinavian airlines is likely to fail over the coming months.”
He added: “They couldn’t make money when oil was at $40 a barrel and certainly are not going to make any money when oil is at $85 a barrel.”
Related Content
