The warm, dry weather may be (long) gone, but the passing summer has kindly left two things to remember it by: a vicious plague of wasps and increased profits at budget airlines. Luton-based carrier easyJet raised its full-year profit forecast for the year to September 30 today to between £675m and £700m, up from £620m-£660m, sending shares up 5.4% to £17.62 by mid-morning.
Behind this cheery news is a late summer splurge in European holidays. Passenger numbers were up 6.8% to 7.06 million, making this the seventh consecutive month over 7 million, while the all important load factor rose 0.2% to a record 94.4%. On a rolling 12-month basis, easyJet has increased passenger numbers by 5.9% to 68.1 million.
The airline pointed to the strong pound (currently worth €1.36) convincing customers that a European break is worth it after all, though it might also be the result of real wages beginning to rise again.
Boss Carolyn McCall credited easyJet’s service and growing shorthaul capacity – up 6% - for allowing it to make the most of the demand. ‘This platform meant that easyJet was best placed to maximise the strong late summer demand from UK passengers to get away to beach and city destinations across Europe and will enable the airline to set new records for full year revenue and profit,’ she said.
Of course, easyJet isn’t the only one doing well. Rival Ryanair (Europe’s favourite airline, don’t you know), said it increased August passenger numbers by 10% to 10.4 million, which takes the wind from beneath easyJet’s wings somewhat.
The fact is, it’s a good time to be in the airline business, period. The economic recovery is lifting the top line, while cheap oil has allowed carriers to take a chunk out of their costs – easyJet for instance expects unit fuel costs to be £100m-£110m less than last year – leading to steep bottom line growth.
If all goes according to forecast, easyJet is set to report a rise in annual profits of between 16-20% - impressive, but some way behind the 66% growth that Ryanair reported in July. The budget battle for the skies continues.
'Stop calling them flexi-crew. Just stop. They are cadets.' - MT hitches a ride with Carolyn McCall for a day at easyJet's corporate HQ, Hangar 89.