Inter-LCC competition

摘要

Investors in Europe's leading LCCs have been getting nervous because easyJet's and Ryanair's success has generated a complex competitive reaction. After announcing its six month results to March 2004 - revenues up 18% to ￡440m, operating loss of ￡31.7m, a 31% improvement on the previous year's result (easyJet has always made a loss in the winter season), yields and load factor both up - easyJet's share price dived 24% in one day. Following on from Ryanair's crisis in January when it lost 30% of its stock-market value, the media reported a major loss of investor confidence in LCCs and started questioning the whole LCC concept. It's really a matter of perspective. As the graph below indicates, both easyJet and Ryanair have marginally increased their market capitalisation from this time a year ago, but their share of the market value of the mainstream quoted airlines has declined - mainly because British Airways' share price has nearly doubled, and Lufthansa and Air France (now incorporating KLM) have seen their valuations increase by 20-25%.