Capacity to remain broadly in line with last year
The rise in fuel costs due to the geopolitical crisis, coupled with uncertainty over the outlook for travel demand, is prompting AEGEAN to keep capacity, measured by available seats, broadly in line with last year’s levels, ranging from -1% to +1%, as part of its strategy.
Speaking during a conference call on the company’s first-half financial results, AEGEAN Chairman Eftichios Vassilakis said that with the geopolitical crisis having sent fuel costs soaring, AEGEAN will not increase capacity in 2027, adding that he believed all airlines would adopt a similarly disciplined approach.
He expressed confidence that Greece’s largest domestic airline would address the situation, saying: “Approximately every five years, we find ourselves facing one of these [crises]. The current crisis does not appear to be as serious as the pandemic, so we feel more confident about our ability to manage it.”
“However,” he noted, “even in the event of more aggressive competitive behaviour, the Group has the capacity and ability to protect its market shares on strategic routes and at key destinations. Our planning will be monitored and reassessed every week, with much faster adjustments than in the past. We view the current environment as an exceptional situation in which changes may be required depending on demand and the cost structure of each route.”
“As always during periods of crisis, I believe that certain opportunities will also emerge, in one way or another, allowing us to strengthen our position before the crisis is over. These may relate to the fleet, routes, our market position or our bases. In any case, we are accustomed to dealing with such situations in the aviation industry. Approximately every five years, we find ourselves facing one of them. The current crisis does not appear to be as serious as the pandemic, so we feel more confident about our ability to manage it,” the company’s chairman said.
Regarding fuel prices, Vassilakis said: “We had not anticipated that the price of jet fuel would return to current levels, which are approximately 100% higher than at the beginning of the year. Following the initial ceasefire agreement in June, we all hoped that there would be a de-escalation. That proved temporary. It is now clear to the markets that, at least for the next two or three quarters, we will probably face significantly higher fuel prices than the levels we had become accustomed to. We may even be paying twice as much as we were a year to a year and a half ago.
“This means that we have been able to make use of the greater capacity of the A321neo aircraft, which now account for a larger share of our fleet. At the same time, we have a fairly positive indication — though not yet certainty — that revenue per available seat kilometre in the third quarter will not be lower than last year. We expect it to be marginally higher, including September performance. This is a positive indication of how we have managed to rebalance our network and respond to market conditions. Overall, demand during the summer quarter proved fairly resilient.”
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