Easyjet fuels investor joy with better outlook
By Michael Northcott Thursday, 24 January 2013
Low-cost airline Easyjet has cut its loss forecast for the first half of its financial year thanks to an early takeoff in revenues.
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The airline’s total revenue grew 9.2% to £833m for the final quarter, and it expects H1 pre-tax losses to fall to somewhere between £50m and £75m. In the same period the year before, losses were £112m, so this would be a big improvement.
The future may be rosier for the airline if passenger stats hold up too: the number of customers it carried in the final quarter of last year grew by 6.2% to 13.7 million, compared with the same quarter the previous year.
Chief executive Carolyn McCall said: ‘[The company has] made a strong start to the year due to a combination of management action, competitor capacity reductions and the benign operating environment.’
The row between easyJet and its founder Stelios has worsened, as he, his brother and his sister each sold 200,000 shares in the company last week. He is threatening to sell yet more of his family’s stake if it expands its fleet any further, as he thinks that doing so will ‘destroy shareholder value’.
Nonetheless, the airline’s shares were up 4% in early trading on Thursday, and over the course of the last 12 months have risen 101%. Stelios is obviously not having quite the impact he wants.
And talking of ‘competitor capacity reductions’, easyJet’s low-cost rival Flybe has just announced plans to cull 10% of its UK staff as part of plans to try and get back to profit. This involves making 300 people redundant, and it will also outsource thing such as aircraft maintenance and in-flight catering.
Chairman and CEO, Jim French, said: ‘I am extremely disappointed that many valued and hard-working colleagues may have to leave the organisation. It’s a decision that we have tried to avoid and it is the first time in almost 30 years of business that we have had to take such action.’ But he added that ‘today’s announcement represents a clear and realistic plan to return Flybe to profitability.’