Sun-seekers escaping bleak British winter boost EasyJet earnings

No-frills airline EasyJet has reported a pre-tax loss of £61m in the six months to March 31, half its interim losses this time last year.

by Rebecca Burn-Callander

Losses are rarely cause for celebration. However, in the airline industry where the first half of the financial year is almost always a wash-out for carriers, halving your usual income deficit is definitely something to write home about.

Summer holiday season is EasyJet’s peak time, and usually more than makes up for a long and dreary financial winter. And this year, the pressure is off the low-cost airline: it has already halved its 2012 interim losses from £121m to £61m, which means an extremely rosy outlook for the full year. Analysts over at Deutsche Bank reckon that EasyJet could be in for an annual pre-tax profit of £401m, up from £317m in 2012.

The better-than-expected results have been driven by millions of Brits fleeing these damp and miserable shores in the run-up to Easter. Total revenues are up 9.3% year on year to £1.6bn. This has enabled EasyJet to up its revenue per seat 5.8% to £53.39.  The fleet’s average load factor – a measure of how efficiently EasyJet fills its aircraft – has hit 88.6%, with 30 million seats sold during the period.

In a statement to investors today, CEO Carolyn McCall (you can read MT’s exclusive interview with McCall here) said: ‘EasyJet delivered a strong first-half performance, demonstrating the company’s structural advantage in the European short-haul market against both legacy and low-cost competition, and a continuing resilience against a challenging European macroeconomic environment.’ That basically translates to an air punch.

But there a few clouds in an otherwise azure blue sky. EasyJet is having to combat higher charges from airports in Spain and Italy, which are pushing up costs by 4%. It’s also still involved in boardroom wranglings with founder Stelios, who is trying to block the purchase of up to 200 next-generation aircraft to replace its existing fleet. Stelios would rather that the cash were returned to investors (himself included). EasyJet neglected to mention whether it is going ahead with the acquisition in its trading update.

Stelios usually pops up with some issue or other to whenever EasyJet posts any results but has been conspicuously quiet today. Maybe he’s run out of things to be upset about: his longstanding rival Sir Mike Rake, whom he’s been trying to oust for years, has now been replaced by John Barton (not to be confused with footballer Joey Barton) and EasyJet’s shares has risen 1.5% to £11.47 in early London trading.

On the plus side, it doesn’t look like EasyJet’s fortunes are going to take a turn for the worse any time soon. Cash-strapped consumers are still opting for short-haul trips over holidays further afield and the orange airline has also upped its marketing efforts to the lucrative business traveller market – good timing too, as Air-France-KLM and Lufthansa have just cut capacity to many short-haul routes.

It seems that not even the sky’s the limit for EasyJet…

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