Aegean will gradually increase the capacity of its flights from the end of March for the summer period, with the company noting, however, that the management of the network will be dynamically shaped, depending on market conditions.
Most of the company’s fleet (80%) this summer will operate from the airports of Athens, Thessaloniki and Larnaca with the remaining 20% ​​of capacity to be invested in the activity of the region.
For this summer season, the company states that prospects remain positive, a fact which is confirmed by the reservations. He notes, however, that competition is intensifying, while the effects of war travel to Ukraine and the cost of the energy crisis remain unknown.
“Undoubtedly, both the significant increase in the price of oil caused by the Russian invasion of Ukraine and the general inflationary pressures affect the prospects of recovery of the Group and the industry in general,” said the management of the listed company in its forecasts for this year. 2021 report.
The situation in the first months of the year
For the course of the first months of the year, the management of Aegean notes that the prevalence of the Omicron mutation from mid-November 2021 affected demand, with the effects being evident in the first months of 2022, as both Greece and most countries in Europe new measures have been imposed due to the large increase in cases.
From the beginning of 2022 until mid-March, Aegean offered 33% fewer seats compared to the levels of capacity offered in 2019, having made the necessary adjustments. Passenger traffic was 49% lower than in 2019 with an average occupancy of 63%.
Flight performance was higher than in 2021, but low occupancy is expected to affect the financial performance of the first quarter of 2022. Despite the more modest start to the year due to the Omicron mutation, the prospects for recovery of demand, especially during the summer period, at the beginning of 2022 appeared positive.
Greece was one of the countries that prevailed in 2021 on the tourist map, further strengthening its position both in Europe and worldwide. Therefore, although in 2022 the industry is expected to operate for another year under pandemic conditions, in the absence of additional negative external factors, the management estimates that demand conditions in the summer will continue to follow the recovery path that began in 2021. is also based on the upward trend of pre-bookings recorded by Aegean since the beginning of the year.
The competition is intensifying
On the other hand, as Greece has higher prospects for recovery than the rest of Europe, it makes sense to expect a higher capacity investment from competing airlines.
“In an environment where competition intensifies, it becomes even more necessary but also confirms the strategic direction of the company to invest in the diversification of its product as the quality choice of tourism products with high standards and innovation seems to gain ground in the preferences of passengers,” he notes. the management of Aegean.
Developments in Ukraine
Regarding the current developments that emerged with the Russian invasion of Ukraine, the listed company’s management states that “it is obvious that both aviation and tourism are particularly sensitive to major changes in geopolitical and economic conditions.”
The immediate and obvious effects relate to the loss of air traffic to and from these markets, but which are not considered significant due to their relatively small contribution to both Aegean (less than 3% in passenger traffic) and the market as a whole. (2% of foreign arrivals in the country).
However, the indirect potential consequences may include negative psychology and deteriorating financial conditions. “At this stage, it is difficult to assess the situation and specifically to predict whether and to what extent the mood and purchasing power of travelers may be affected, given the significant increase in energy costs and inflation,” it said.
The new planes
Business for the Aegean group in 2022 is expected to be a transitional period regarding the restructuring of the fleet due to the expected receipt of a large number of aircraft of the Airbus A320 neo family (11 by the end of the year) and the restructuring of the fleet of helicopters from aircraft Q400 to ATR72-600.
“The arrival of new more efficient aircraft is expected to help improve unit costs, especially from the first half of 2023, when most of the fleet will consist of aircraft of either new technology or new more competitive conventional terms of use.
Undoubtedly, both the significant increase in the price of oil caused by the Russian invasion of Ukraine and the general inflationary pressures affect the prospects of recovery of the Group and the industry in general.
Aegean uses a hedging policy to hedge against rising oil prices in order to reduce the volatility of its financial results.
It should be noted, finally, that Aegean recently agreed on the early expiration and re-delivery to the lessor of eight Q400 aircraft. The initial lease agreements expired in June 2023 and with the new agreement all 8 Q400 aircraft will be returned to the lessor within the first half of 2022. At the same time the Group entered into an agreement for the purchase of three ATR72-600 aircraft, one of which has already received and the other two are expected to be received within the first half of 2022.
In addition, the Group has agreed with aircraft leases the lease of 6 ATR72-600 aircraft, two of which have already been received (one within 2021 and one within 2022) and the remaining four aircraft are expected to be received within the first half of 2022.
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Source: Capital
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