Of that extra £74m in losses, Easyjet said that £43m was attributable to higher fuel costs, and £12m to extra passenger taxes. So the mathematicians among you will quickly work out that even if you strip out both factors, Easyjet still performed worse than it did in the same period of the previous year. Chief exec Carolyn McCall admitted today that things have been 'tough', thanks not only to fuel prices and taxes but also to 'cautious behaviour by consumers'. The period also covered strike action and the snow chaos of December, which won't have helped.
And there was some cause for optimism in today's results. That rise in passenger numbers is impressive in a difficult and competitive market, especially since nearly 60% of the total now come from outside the UK (which means it's less exposed to the economic conditions here). Non-fuel costs are down; punctuality is up; it's expecting revenue per seat to be up slightly in the second half... And its balance sheet is also looking healthy: McCall said the airline was churning out lots of cash, so it would be able to resume dividend payments next year. This explains why its share price is up this morning, despite that drop in profits.
EasyJet founder and largest shareholder Steios Haji-Ioannou, who has been calling loudly and often for better value for the firm’s investors, should be pleased at the return of the dividend. Stelios wants the board to return a whopping £600m of the £1.43bn cash pile they are sitting on to shareholders, saying ‘I think shareholders would be better off if the board returned this surplus cash to them so they can invest it in other businesses.'
He also called for EasyJet management to sweat its assets harder and raise margins – and given that Emirates seems to have been able to absorb rising costs in a way Easyjet has not, he may have a point. The Dubai-based long-haul airline posted profits up to £918m despite additional fuel costs of £122m. Of course a budget airline like EasyJet can only dream of the kind of mark-up Emirates enjoys on a business class flight to the Middle East. But with high fuel costs looking like they are here to stay, adding a few points on the margins would be one way of addressing EasyJet’s flagging profitability. But we’re willing to bet McCall and her fellow directors won’t thank Stelios for pointing this out...