EasyJet Will Close Madrid Base as Profitability Suffers in Spain
Profit from EasyJet’s Madrid operations is below that at its other bases, the company said today in a statement. “This is due to a combination of overcapacity in the Spanish airline market, leading to low revenue per passenger, combined with high airport charges which have more than doubled in the last two years,” Luton, England-based EasyJet said.
Spain’s government is battling to reduce its debt as the recession deepens, pushing unemployment above 24 percent. Barcelona-based Spanair SA in January became the first scheduled European carrier to fold since the last recession as the European Union’s highest jobless rate clipped traffic and the Catalonia government said it would no longer supply funds.
Easyjet will reduce capacity to Madrid by about 20 percent in the next financial year and to Spain as a whole by 7 percent. Total capacity will increase by about 5 percent in the 12 months ending Sept. 30.
International Consolidated Airlines Group SA (IAG)’s Spanish unit Iberia started a lower-cost division in March in an effort to stem losses on short-haul trips. Iberia posted a 170 million- euro ($216 million) loss in the first quarter.
Should they remain at current levels, this year’s lower fuel prices will offset any restructuring costs, EasyJet said.
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