News last week that EasyJet’s (EZJ) chief executive of seven years Johan Lundgren was to step down in early 2025 clearly rattled investors, sending the budget airline’s shares down more than 5% on the day.

Lundgren’s decision to fly the coop was all the more surprising given it came the same day the budget carrier reported a 22% increase in total revenue to £3.26 billion and a 17% increase in passenger revenue to £2.04 billion for the six months ending 31 March 2024.

Amidst the market chatter it was suggested Lundgren’s departure could be a sign of more turbulent times to come for the airline industry.

So far consumer demand for travel remains strong, with UK customers willing to suck up inflated ticket prices and added fees – despite the cost-of-living crisis - to get away from the dreary weather at home, but the skies appear to be darkening for the sector.

While EasyJet rival Ryanair (RYA) this week reported record passenger numbers and profits for the full year after hiking fares by 20%, on a call with analysts the company said it may be forced to cut prices more than expected this summer to fill flights.

‘There’s a little consumer resistance out there and most airlines are engaged in price promotion through April, May and June’, said chief executive Michael O’Leary.

Ryanair also said its expansion plans had been hampered by delays to the delivery of new aircraft from Boeing (NYSE:BA) which have left it short of some 23 737s due to be delivered by the end of July.

This delay could have a knock-on effect on traffic growth next year, hinted O’Leary.

Delivery aside, aerospace giant Boeing has come under scrutiny for aircraft safety after a panel on one of its 737 Max jets operated by Air Alaska blew out in mid-air in January this year, causing the FAA to ground 171 similar aircraft.

In March of this year, an American Airlines Boeing 777 had to make an emergency landing at Los Angeles International Airport after reporting a ‘mechanical problem’.

Meanwhile, ongoing geopolitical tensions in the Middle East and the Russia-Ukraine war could continue to have an adverse impact on fuel costs, while strikes at air traffic control centres and airports are causing further disruption to flights.

Last year, Europe suffered 67 days of air traffic control strikes causing thousands of flight cancellations, and this year baggage handlers, catering staff and border force staff have already staged walk-outs over pay and conditions.

‹ Previous2024-05-23Next ›