EasyJet celebrates rise in business travellers

Shares soar after the budget airline predicts profits of up to £230m this year.

by Elizabeth Anderson
Last Updated: 22 Jul 2011
EasyJet founder Sir Stelios Haji-Ioannou might manage to raise a rare smile on the latest news of the budget airline’s fortunes. Its shares soared by as much as 16% this morning after the carrier’s focus on business travellers pushed revenues up by almost a quarter in the three months to June.

Revenue rose 23% from last year to £935m. The airline said its new strategy of attracting more business travellers was paying off – the number travelling club class increased by a fifth over the quarter.  The no-frills carrier now expects pre-tax profit for the year to September to be between £200m and £230m – a significant amount more than the £175m analysts had previously been touting.

The prediction might raise some eyebrows in light of the soaring fuel prices and economic uncertainty, along with another bout of volcanic ash cloud, that has dogged the airline industry this year. Last month Flybe reported a pre-tax loss of £4.3m in its full year results, compared to a £24.6m profit last year. Meanwhile easyJet itself reported in May that losses almost doubled in the first half of the financial year, from £79m to £153m.

But the airline has been keen to point out that demand for flying is still strong: passenger numbers increased by 17.3% on last year, although 2010’s figures were skewed by the ash cloud which disrupted flights. Even so, excluding the impact of the volcano there was an 8.8% growth in passenger figures. The airline also said that more than 75% seats had been sold over the summer season so far.

It hasn’t all been plain sailing in the world of easyJet management either. Stelios Haji-Ioannou, the founder of the airline and its largest shareholder, has been involved in a series of disputes with the rest of the board.  Never one to shy away from frequently expressed rowdy views, the outspoken entrepreneur has previously fought against a £1m pay package for ex-CEO Andy Harrison and threatened to withdraw the right to use the easyJet name after a row over the board’s management structure.

The latest feud occurred this month after he took umbrage with the board’s decision to order aircraft from Airbus; a relationship he described as ‘incestuous’ (as the nation that produced Oedipus, the Greeks know a few things about this topic.) He also hit out at the number of planes being ordered and their price, accusing easyJet of deliberately understating the price in order to ‘mislead’ shareholders.  The board is no doubt hoping that an optimistic summer might be enough to put him back in his orange easyBox for the time being. Now there’s an idea for him to develop…

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