What's going on?
On Friday, British budget airline EasyJet said its annual profit would take off toward the high end of its previous expectations – boosted by its rivals’ crash landings.
What does this mean?
EasyJet’s picked up travelers left behind by other low-cost competitors going bust – like Monarch and Air Berlin late last year. And EasyJet’s Irish rival, Ryanair, has had its wings full with staff strikes (for improved working conditions) leading to several canceled flights – which probably played right into Easyjet’s hands.
The warm summer in Europe (a record for the UK) dissuaded would-be holidaymakers from holidaymaking. British travel group, Thomas Cook, said last week that its annual profit would be 15% lower than last year – and its shares nosedived by 25%.
Why should I care?
For markets: Fortune favors the diverse.
On Thursday, shares of Germany’s TUI Group – rival to Thomas Cook – rose by 3%. TUI faced the same difficulties as everyone else, which led it (along with everyone else) to reduce prices in order to encourage customers to book trips – but its hotels, resorts, and cruise businesses helped to pick up the slack. As a result, TUI’s expecting its profit for the year to be exactly what it forecast, growing by 10% on the year prior.
For you, personally: No day like a holiday.
The rising value of the US dollar (and potentially a soon-to-be-strong British pound) might encourage people to take more holidays in continental Europe – especially as Italy’s high spending plans shook investors and led them to sell the euro, pushing its value down. One effect of this is that European products appear cheaper to foreign buyers – making eurozone vacations a more attractive, cheaper prospect. And, if consumers do choose to take advantage, travel companies are set to benefit from more sales – as they did when customers booked trips to Turkey after the lira’s value fell to new lows.