UPDATE: EasyJet Admits It's Struggling With Crew Shortages

28th Jul 2010 09:20

(Adds comment, details) By Kaveri Niththyananthan Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K.-based low-cost airline easyJet PLC (EZJ.LN) Wednesday confirmed it had crew shortages on some parts of its network that is hampering punctuality, an issue that has caused the airline's founder to threaten to take away its name. New Chief Executive Carolyn McCall, who has only been in the job for three weeks, said she would focus on improving punctuality, dealing with a wave of summer bookings and adding resources at London's Gatwick airport in the short term as the airline faces criticism for its punctuality. Last week, lawyers for the airline's founder Stelios Haji-Ioannou, sent a letter to easyJet threatening it with losing the right to its name if it didn't improve its punctuality performance within 90 days. Haji-Ioannou recently resigned as a board member at easyJet but is still a shareholder and also and owns easyGroup, a collection of companies operating things like car hire, gyms and hotels. EasyJet says it hasn't breached any conditions that would allow that Haji-Ioannou to terminate its brand license. EasyJet said Wednesday that total operating costs before fuel and volcanic ash related costs will be up 2% to 3% per seat for the full year because the has been forced to hire aircraft complete with staff from other airlines to cope with the shortages. Air traffic control strikes in France had also added to costs, it said. Acknowledging the company has issues to sort out, McCall said easyJet is considering hiring consultants or an external facilitator to challenge established thinking and ask "a lot of questions." It would take a "careful and considered" view on crewing levels, rostering and its internal systems to ensure everything ran more smoothly, she said. At the weekend, the union representing easyJet pilots said they'd outlined GBP5 million of cash injections to help improve performance, including help to draw in new pilots, and a major review of pilot numbers and rostering practices. The union had criticized Haji-Ioannou for "damaging the very brand on which his good name comes" after a number of battles between the founder and the board in recent months over strategy. Haji-Ioannou, who together with his family own about 38% of the airline, has over the past year repeatedly called for the company to start paying a dividend, halt expansion plans of its fleet and move away from a single aircraft supplier. He stepped down from the easyJet board over the dispute. McCall said it is "absolutely our intention to resolve" the dispute with Haji-Ioannou, but confirmed the company does have contingency plans should the airline be stripped of its right to use the easyJet brand. She declined to say what the plans were. The airline said it had continued to deliver a good commercial performance in the third quarter despite dealing with the fallout from the volcanic ash cloud that closed most of Europe's air space for a time in the spring and the staffing problems. EasyJet said in a trading update that fiscal-year pretax profit would be in line with previous guidance of between GBP100 million and GBP150 million at current exchange rates and fuel prices. The forecast includes a GBP65 million hit because of the impact of the volcanic ash disruption. Finance Director Chris Kennedy said easyJet will explore all options to secure compensation for losses incurred from the closure of airspace now that the U.K. government has said it won't be providing financial compensation. He declined to give details. EasyJet said 64% of available fourth-quarter seats have been booked and it expects total revenue per seat at constant currency in the final quarter to increase by between 2% and 3%, or by 2.5% for the fiscal year. Total revenue per seat for the three months to June 30 increased 3.5% to GBP53.23 from GBP51.42 a year earlier, while total revenue per passenger increased 1.8% to GBP61.79. Revenue increased 5.3% to GBP759.2 million from GBP720.8 million. Ancillary revenue, or income generated by means other than fares, including checked bag charges, edged slightly higher to GBP142 million from GBP140.2 million. Passenger numbers increased 3.5% in the three-month period to 12.3 passengers, mainly driven by growth in non-U.K. originating passengers, which increased 3.7 percentage points to 53.1% of total passengers. That was despite being affected by industrial action by air traffic controllers in France. EasyJet said it had benefited by GBP7 million as a result of passengers switching away from British Airways PLC (BAY.LN) and avoiding strikes by BA cabin crew. The ongoing dispute between Haji-Ioannou and the board over the airline's fleet and dividend strategy has helped push easyJet's share price 11% lower over the past three months. However, at 0723 GMT, the stock was up 0.8%, or 4 pence, at 438 pence. -By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299; [email protected] (END) Dow Jones Newswires July 28, 2010 04:20 ET (08:20 GMT)