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EasyJet sees Air Berlin assets being 'earnings accretive' in 2019

EasyJet's chief financial officer Andrew Findlay expects the assets it is taking over from Air Berlin to make a positive contribution in 2019.

The UK budget carrier has agreed to lease up to 25 ex-Air Berlin Airbus A320s for operations from the German capital Tegel airport, recruit 1,000 flightcrew formerly with the now-defunct Oneworld member and acquire other assets, including airport slots, for a cost of €40 million ($53 million).

Speaking on an investor call today, Findlay said that while EasyJet's Tegel operation would create a £60 million of "headline" cost in 2018, it would become "earnings accretive" in 2019 and represent "attractive financial returns" in the long run, given the airport's strategic market position.

Findlay says EasyJet will initially operate wet-leased A320s at Tegel and conduct its first flights under its own branding from the airport in January 2018. Over the course of the year, the wet-leased aircraft will be phased out in favour of dry-leased aircraft crewed by airline staff, with the process completed by the winter of 2018.

This "parallel approach", which will include training new crew and sourcing dry-leased aircraft and other expenses, will represent an additional "non-headline" cost of £100 million in 2018, Findlay predicts.

He says former Air Berlin crew will be hired under collective agreements negotiated by the Verdi union.

EasyJet has opted for this approach and declined to obtain Air Berlin's air operator's certificate in order to limit "legacy contagion" and avoid inheriting the "ongoing complexity, inefficiency and cost of the Air Berlin operation", adds Findlay.

The combination of EasyJet's operations at Berlin's Schonefeld and Tegel airport will create a "substantial airline as big as Monarch [Airlines]", he foresees.

But he warns that it will "take some time" for EasyJet to "optimise the schedule" at Berlin, a process he expects will continue into 2022.

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