"EasyJet invades Ryanair's turf"

Thursday, September 23, 2004

EasyJet invades Ryanair's turf
By Kevin Done
United Kingdom - The Financial Times


EasyJet, the low-cost airline, fired a warning shot on Thursday at Ryanair,
its Irish rival, by moving into the Republic of Ireland market for the first
time. 

It is moving on to Ryanair's home turf with the launch of three routes from
London Gatwick to Cork, Shannon and Knock. 

The two carriers, Europe's two biggest low-cost airlines, have largely
avoided head-to-head rivalry on the same routes to date but, as their
networks grow rapidly around Europe, so does the threat of direct
competition. 

EasyJet's foray into Ryanair territory comes in spite of a cut in planned
capacity growth for next year and a warning of continuing downward pressure
on fares in 2005, which prompted a sharp fall in its share price on
Thursday. 

The airline's move into the Republic of Ireland - it has a significant
presence in Belfast, where Ryanair is absent - has been provoked in part by
recent moves by its Irish rival. 

Ryanair has announced plans to go head-to-head with its rival on two of
EasyJet's newest routes from London Stansted to Valencia and Almera in
Spain. It has also moved to expand its presence at London Luton, EasyJet's
headquarters airport. 

"There is a big enough playground out there," said EasyJet. But the Ryanair
moves to enter the two Spanish destinations "seemed like a deliberate
provocation". 

EasyJet believes that Ryanair's routes from the three Irish points to
Stansted are among its most profitable because they have faced little
competition. 

Ray Webster, EasyJet chief executive, took aim directly at Ryanair's image
of always having the lowest fares. "These are our first services to the
Republic of Ireland, where airfares, in many cases, have remained stubbornly
high," he said. 

EasyJet on Thursday said it would cut its planned capacity growth next year
from 24 to 16 per cent as it raised its profits forecast for the financial
year ending September 30 from more than £52m to more than £60m. 

In spite of that, its share price fell by 11p or 8 per cent to close at an
record low of 128p as worries over high fuel prices persisted. The share
price has failed to recover from two profit warnings earlier this year and
EasyJet has been the worst performing stock in the FTSE 350 index since the
start of the year, falling by about 56 per cent. 

In a further turn of the competitive screw, EasyJet said on Thursday that it
was also adding daily services to Valencia and Almera from Gatwick. 

EasyJet now has 29 routes from Gatwick, more than from any other of its
airports including Stansted and Luton.


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