EasyJet boss predicts more airline failures following Primera Air collapse

More airlines are likely to fail due to rising fuel costs, the boss of easyJet has warned.

Chief executive Johan Lundgren said “weaker players” face increasing pressure amid the price of oil reaching around 85 US dollars a barrel, compared with 69 US dollars in April.

He made the comments just nine days after the collapse of Primera Air, which left thousands of passengers scrambling to find alternative flights home and customers with future bookings having to seek refunds from credit and debit card companies.

Mr Lundgren expects more consolidation in the aviation industry, with successful airlines or airline groups taking over struggling carriers.

He told the annual convention of travel trade association Abta in Seville, Spain: “The fuel price being up there and perhaps continuing to increase will put some of those weaker players in a more difficult situation.

If you are exposed to fuel in the way that you haven't hedged and you have a weakness in your model which means you don't have resilience ... then you should be worried

“I think there will be a consolidation from the fact that we’re going to see more failures.”

He went on: “If you are exposed to fuel in the way that you haven’t hedged and you have a weakness in your model which means you don’t have resilience … then you should be worried.”

In April, British Airways owner IAG acquired a 5% stake in Norwegian with a view to starting takeover discussions.

Norwegian has struggled to contain costs amid its rapid expansion, and had around £2bn (€2.2bn) of net debt at the end of last year.

Ryanair boss Michael O’Leary recently predicted it would “go bust this winter”, but the Scandinavian carrier insisted his comment has “no root in reality”.

Icelandic operator Wow – which operates low-cost flights to North America via its Reykjavik hub – told the Financial Times last month it is aiming to raise up to 300m (€260m) by selling “less than half” of the loss-making company through an initial public offering.

EasyJet bought Air Berlin’s operations at the German capital’s Tegel airport in December and is in discussions about taking over cash-strapped Italian airline Alitalia.

But Mr Lundgren insisted easyJet has “plenty of room to grow organically” and will not rely on mergers and acquisitions to expand.

He noted that the Luton-based carrier is the second largest airline in Europe but “only has 10% market share”.

- Press Association


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