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LONDON (Alliance News) - Low-cost airline easyJet PLC Tuesday said it swung to a profit in the first half of its financial year as it flew more passengers and it benefited from lower fuel prices and favourable exchange rate movements, and it said it is still on track to grow revenue and profit in the year as a whole despite a hit in April from an air traffic control strike in France.
Airlines traditionally make little or no money in the winter months when travel demand is lower and they face higher costs due to travel disruptions and items like de-icing of planes. However, this year they are getting a benefit from lower fuel prices.
EasyJet said it made a pretax profit of GBP5 million in the six months to end-March, compared with a loss of GBP53 million a year earlier, as revenue rose to GBP1.77 billion from GBP1.70 billion.
Revenue per seat rose 2.6% on the year on a constant currency basis and by 0.2% per seat when currency fluctuations are taken into account, buoyed by improvements in load factor, strong trading in October and the earlier timing of Easter, among other factors.
Cost per seat was up by 2.9% on a constant currency basis, but declined 1.4% at actual rates. The increase on a constant rates basis was caused by expected increases in some airport charges, particularly in Germany and Italy, increased disruption costs in the second quarter, and costs of building up new bases.
Still, the airline said it had delivered GBP21 million of "sustainable" savings in the first half of its financial year.
"EasyJet has delivered a record performance in the first half of the year by continuing to deliver its strategy of making travel easy and affordable for passengers. The profit in the half reflects the delivery of our customer focused revenue initiatives and a strong finish to the ski season as well as the benefit we received from the lower fuel price and favourable foreign exchange movements," Chief Executive Carolyn McCall said.
"As we enter the important summer season forward bookings are in line with last year and as we predicted passengers are benefitting as fares fall to reflect a more competitive operating environment and lower fuel costs. easyJet continues to be well positioned to grow revenue and profit this year, delivering sustainable returns to shareholders due to its compelling network, low cost base and strong balance sheet," she added.
Looking forward, easyJet warned that air traffic control strikes in France had knocked about GBP25 million off its profit, and it expects revenue per seat at constant currency to decline by low single digit percentage points in the second half of the year. The earlier timing of Easter will also hit revenue per seat, and, combined with a one percentage point reduction in underlying trading means it expects third quarter revenue per seat at constant currency to be down around four percentage points.
The airline said it still expects cost per seat at constant currency excluding fuel to increase by around 2% in the second half of the financial year and by up to 2.5% for the full year "assuming normal levels of disruption". However, this does not include a possible additional navigation charge from Eurocontrol of up to GBP12 million which easyJet is currently disputing.
The second half cost per seat increase will largely be driven by charges at regulated airports, particularly in Germany and Italy, increased crew costs and higher navigation charges. Cost per seat at constant currency including fuel is expected to decrease by around 1% for the full year.
Still, the airline is expecting its fuel bill to be down between GBP60 million and GBP85 million on the year in the second half, and to be down between GBP95 million and GBP120 million for the year as a whole. That benefit will be somewhat offset by adverse currency movements which are expected to have an impact of about GBP40 million in the second half and about GBP20 million in the year as a whole.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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