easyJet relaunches package holiday business

… despite a drop in profits

easyJet announced at the start of this week that it is relaunching its package holiday business as it looks to increase customer numbers and capitalise on what they perceive to be a gap in the market left by Thomas Cook. The UK budget airline made the announcement as it reported a significant drop in profits.

Around 20m people use easyJet to fly within Europe every year, but only 500,000 currently use the company to book accommodation. It will launch EasyJet Holidays before Christmas, “offering beach and city package” deals to customers.

easyJet said the way that people take holidays now is changing from the traditional 7 and 14 night stays to creating trips with differing durations. It said the European package holidays market is now worth around £61bn a year, with the UK’s standing at £13bn, which has grown six per cent annually.

“easyJet is excited about the opportunity to build a major player in the holidays market for a low up-front investment and with limited risk,” the company said, stating that it expects the new holiday platform to break even in the 2020 financial year.

Chief executive Johan Lundgren said: “easyJet finished the 2019 financial year with a strong performance across the business and a record summer. “I am really thrilled that with the launch before Christmas of our brand new easyJet Holidays business, we are bringing flexibility and excellent value to the holiday market.

“We believe there is a gap in the market for a modern, relevant and flexible business for today’s consumer.”

Revenues up but profit down – Brexit blamed again

Despite the 26% drop in pre-tax profits to £427m for the 12 months to 30 September, the carrier did announce an 8.3 per cent jump in revenues to £6.4bn, on the back of increased capacity. However, total revenue per seat decreased by 1.8% to £60.81 through the period, and EasyJet said it had been impacted by “some weakness in consumer confidence”.

The company blamed weaker confidence due to uncertainty surrounding Brexit, but said revenue per seat was better in the second half of the year, due to its initiatives as well as the positive impact of strikes at rivals British Airways and Ryanair.

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