EasyJet predicts smaller than expected pre-tax loss in first half
EasyJet on Tuesday predicted it would report lower than expected first-half losses partly because falling oil prices are serving to cut the budget airline’s fuel bill.
Carolyn McCall, easyJet chief executive, said the company expected pre-tax losses of between £10m and £30m in the six months to March 31, compared with £53m in the same period in 2013-14.
Analysts were expecting losses of £57m in the first half of easyJet’s current financial year.
EasyJet generates its profits in the second half, reflecting how this coincides with increased travel in the summer months. Shares in easyJet rose 1.9 per cent to close at £17.89 on Tuesday.
Ms McCall suggested that passengers could soon also share in the benefits of falling oil prices, which have more halved since last summer. “EasyJet expects that lower fuel costs will be beneficial for its customers as fares adjust,” she said.
In a trading update for the three months to December 30, its first quarter, easyJet reported that revenue increased 3.8 per cent to £931m compared with the same period in 2013.
The Luton-based carrier benefited from more UK passengers flying out on holidays and from extra travellers in France, where easyJet has been muscling on territory served by Air France-KLM.
“We enjoyed a strong October across the network — particularly on UK leisure flights to beach destinations and on French domestic routes where we continued to build passenger numbers after a busy September,” said Ms McCall.
The airline was also helped by success in its strategy of winning more business passengers — a key battleground for low-cost airlines — and where it has forced bigger rival Ryanair to follow its lead.
EasyJet said it had seen a record month for business travellers in October after its first television advertisement aimed at the corporate market.
Analysts said the increase in revenue per seat of 3.7 per cent at constant currency in the first quarter was a good performance.
“These are very strong numbers, with easyJet delivering an impressive revenue performance despite a significant increase in competition on its network this winter,” said Oliver Sleath, analyst at Barclays.
At Gatwick airport, where easyJet is the biggest airline, the company grew capacity by about 10 per cent in the first quarter after it started using take-off and landing slots it bought in 2013 from regional carrier Flybe.
The analysts’ consensus forecast for easyJet’s pre-tax profit for 2014-15 is £635m.