Föhrenbergkreis Finanzwirtschaft

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Hitting turbulence: budget airlines

Posted by hkarner - 7. Juli 2016

Date: 06-07-2016
Source: The Economist

Budget AirlinesInvestors will closely watch the June passenger numbers released today by easyJet, Europe’s second-largest low-cost carrier. Budget airlines have much to lose from Brexit: easyJet and Ryanair, its larger Irish rival, lost nearly a fifth of their value as the referendum result became clear.

Low-cost airlines have benefited in recent years from the EU’s single aviation market, rising demand and lower jet-fuel prices. But as growth slows in European economies appetite for air travel is expected to fall—more so in Britain.

Ryanair is diverting $1 billion of new planes to other European Union countries, and Wizz, a Hungarian rival, says it will stop investing in Britain from this winter.

Ryanair predicts fares will fall by 12% in Europe later this year, in order to keep aircraft full, but it may yet benefit from the turbulence: with the lowest cost base in the industry, it has most to gain from fare wars.

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