EasyJet has rejected a claim that it will fail to return to 2019 capacity levels next summer because of rising costs.
Ryanair chief Michael O’Leary forecast “significant cuts in capacity” by rivals including easyJet this winter and suggested last week that, aside from Ryanair, airline capacity for summer 2023 would not exceed this summer’s level.
However, easyJet chief executive Johan Lundgren insisted: “We expect all capacity to be back by next summer.”
He reported it easyJet will operate 90% of its 2019 capacity this July through to September
Lundgren acknowledged: “Some airlines will be restrictive in the capacity they put on the market. When you see significant cost increases, legacy airlines tend to be much more restrictive on capacity.
But he denied that the rising cost of living and deteriorating economic outlook in the UK and across Europe would inevitably bring a downturn in bookings following strong demand this summer.
Lundgren said: “It remains to be seen whether inflation has an impact.
“Clearly, there will be additional pressures on households. But there is still pent-up demand and travel is one of the last things people sacrifice.”
He suggested easyJet “can have a competitive advantage” in these circumstances, saying: “EasyJet tends to do better than others [in a downturn] because value for money becomes more important.”
Speaking last week as easyJet reported a loss of £114 million for the three months to June, Lundgren noted the “volatility on fuel prices” but described fares as “very healthy”.
He reported yields on tickets for July to September up 13% on summer 2019 but added: “It’s a mixed picture. You can still find attractive fares.”
Lundgren noted: “Fares are not only about costs, but about the level of supply.”
He dismissed a suggestion that the weakening exchange rates of sterling and the euro against the dollar posed a serious problem, saying: “We have hedges in place. It’s part of the overall costs we have to live with.”
But Lundgren acknowledged: “At some point, [the exchange rate] will have an impact and we’ll try to recover the cost in fares.”
O’Leary, speaking after Ryanair reported a €170 million profit for the three months to June, suggested “easyJet and Wizz Air are going to blow their brains out” because of the cost increases.
He warned that the recovery is “very fragile” and said: “The challenge is whether it will continue into winter.”
O’Leary insisted: “Capacity growth in Europe is going to be flat or downward for the next two to three years because of capacity that has already been taken out and won’t come back and competitors taking out [further] capacity.”