Reference no: EM132325478

PAPER#1 Prompt

• Economic Impact of London Olympics?

• Go to library.sfsu.edu and search for England Swings: Discontent in London Over the 2012 Olympics

• Pros and /or Cons?

• Be specific and justify your answers

CAROLINE HYDE easyJet, first half, lost L112 million, and that's beating analysts' estimates. Sure, it's a loss, but the loss is narrowed by L41 million compared to this time last year. Looking quickly at sales for you, coming in at L1.47 billion, that too just ahead of analysts' estimates, up 15.7%. So clearly, the movement into the business market, trying to,dropping the no-frills approach, trying to get passengers to pay for extras, the likes of priority booking, the likes of flexible tickets seems to be paying off. Certainly passenger numbers are up 5.4%. Very quickly for you, let's look at Intercontinental Hotel, the biggest provider of hotel rooms in the world, Linzie, that too beating in terms of sales. They're up more than the 3% analysts have been looking for. However, operating profit did miss analysts' estimates ever so slightly, coming in at $118million, estimates for, were for $122 million. And quickly, Sainsbury's, do have a look at total sales for Sainsbury's full-year, up 6.8%, just ahead of analysts' estimates. Back to you.

01:10LINZIE JANIS Caroline Hyde, thank you very much. So let's speak with the CEO of easyJet. Carolyn McCall joins us live from London for her first interview of the day following these results. Thanks for being with us, uh, Ms. McCall. Uh, the results, uh, about in line with expectations. You've got, uh, some big jumps in revenue per seat, passenger numbers, uh, but I wanna ask you how things are going now. What does summer bookings look like? What's the outlook for the full year?

01:35LONDON CAROLYN MCCALL EASYJET CEO

EASYJET PASSENGER NUMBERS UP 5.4%

EASYJET TOTAL REVENUE UP 15.7% TO L1.5BLN

EASYJET REVENUE PER SEAT UP 11.9%

01:40CAROLYN MCCALL Yeah, I think our outlook, um, we're not changing guns or, uh, consensus estimates, um, uh, because, uh, our forward bookings are actually in line, uh, with, uh, last year, so we're half-bookedfor the summer, 50%, 47%, 50% booked. Um, and the, the, the issue there is we believe very much that we can control what we can control,our strategy is working, we're delivering the strategy, we're delivering returns. We've got great momentum, I think, in the, in the airline. Um, however, of course, there are, um, unknowns like the Olympics, there's the Euro Championships, things that we don't normally have in our half year, um, and we believe, you know, air traffic control will be more disruptive through the summer, um, that's what the indications are. So, so I would say we are confident that we can deliver what we've said we will deliver. Um, and, um, although the economic, uh, environment remains uncertain, um, our strategy is working, and our implementation of it is, is going well.

02:35EASYJET SAYS CAPACITY TO INCREASE 7% IN 2H LINZIE JANIS You mentioned the Olympics there. You expect that's going to perhaps affect your, your punctuality, is that what you're saying? How else might it impact you?

02:40CAROLYN MCCALL Yeah, no, it's a good question. Well, two things. One is that, uh, we believe it will be revenue neutral because it's in our biggest, busiest single time, so we're already carrying very high load factors in, uh, July and August. So we believe it will be revenue neutral, but we, we don't know for sure, but we, that's what we think. And yes, you're right, we think that there are some congestion issues on air space which we're working with the CAA, uh, and that's the air traffic controllers about, uh, but it could be operationally more difficult for us and for all airlines, um, uh, in the UK.

03:10EASYJET NOW EUROPE'S MOST PUNCTUAL AIRLINE: 89%
LINZIE JANIS When you look at the outlook for the rest of the year, one of the things that helped you out in the first half was the fact that you were being disciplined when it came to capacity, being discerning about that, but so were other airlines. So you've all ended up with, uh, with, with bigger yields, with higher prices for tickets. What's the outlook with, in that regard for the second half of the year?

03:30CAROLYN MCCALL Um, I think that capacity will, uh, remember, in the summer, everyone makes their money in the summer, most, you know, airlines lose money in the winter, so the capacity discipline, uh, will remain, I think. Um, that might be through consolidation, uh, it might be through just people being very careful about allocation of, uh, of capacity. Um, but it will be less mocked than it has been in the first half of the year, because summer is where we make our money.

04:00LINZIE JANIS Now you've talked about doing better with business travelers. You say you've increased your market share in that arena. I wonder how you know that, where you get, uh, that, where, how you can draw that conclusion, and also, is this trial of allowing people to prebookand pay for allocated seating, how's that doing? I know it's early days, you just rolled it out in April.

04:15Easyjet
MCCALL SAYS OLYMPICS WILL BE 'REVENUE NEUTRAL' FOR EASYJET

04:20CAROLYN MCCALL Yeah. On the business traveler, um, we use GCMC, which is the travel management company data. Um, they will, they say for the first half of this year, the data shows that the UK business travel market has been completely flat, and easyJet's business traveler has, we, we've grown by 4.1%. So that's, the UK is where we can measure it most definably and clearly, um, and that shows that we're increasing shares. That's where that comes from. Um, on the allocated seating trial, um, we're not doing that really for the business traveler, although of course, it will help on, uh, business passengers. Um, I think a lot of our leisure passengers have actually said, uh, two things. One is that our current leisure passengers, many of them want us to do it. Um, and actually, it's a barrier to entry for a lot of segments who don't currently fly easyJet because we don't have allocated seating. So we're trialing it. It's very early days. We've only really launched the booking funnel, so people can only book this from, uh, April the 11th. So we'll wait and see how it goes. So far, so good. It's had no impact on the operation. Our key measure there will be, uh, our punctuality and our, yeah, that's the key measure. It's not anything else. If we can deliver it operationally, we know our passengers are going to like it.
05:35MCCALL SAYS 40% TO 50% OF SUMMER SEATS ALREADY BOOKED
LINZIE JANIS Lastly, Carolyn, I've got to ask you about the situation in Europe. We've had some worrying developments in Greece. I know that you're trying to expand. You said that you were expanding in France and Portugal. I'm wondering how you make these decisions on where to expand, especially given economies are getting weaker in these places.

05:50CAROLYN MCCALL Well, you know, there's no question that the European, um, outlook is, remains unpredictable and uncertain. Our approach to this is very careful, very considered, and actually, very cautious. So where we are putting our capacity is where we absolutely believe that we can get the returns. So France is an established market for us. We're the number two player. We already have a very good network, we already have, we, we've got five bases there now. It's our biggest single country after the UK, actually, in terms of base, uh, bases. So we know that we will get the return there. You know, there's a lot of room to grow, uh, the low fares market there is, is much below the, the European average. So you're right, we believe that the outlook remains uncertain, and consumer confidence, um, is, is, is an issue that we think about all the time, but we do believe that our low fares and our goodservice are a fantastic customer proposition and that people in, in, in France and in other markets that we're strong in, Switzerland is another good example, as is Germany, um, will actually reappraise us and come to us for the first time because it's such a great proposition. And we are low fares on every route we fly. You know, we are the lowest fare, and that is nine out of ten times. You know, so I think that is what we base a lot of our decisions on, which is, you know, the area, the fact that we know we will get returns.

07:15LINZIE JANIS Okay, Carolyn McCall, the chief executive of easyJet. We thank you very much for joining us this morning.

07:20Carolyn McCall Thank you.