easyJet Share News (EZJ)

(Sharecast News) - EasyJet updated the market in its trading for the quarter ended 31 December on Tuesday, saying it delivered a "good" performance, with robust customer demand driving passenger and ancillary revenue which is in line with expectations.The FTSE 100 low-cost airline said underlying revenue per seat was positive, including good ancillary revenue growth.That was offset, as expected, by the impact from the prior year's one-off revenue benefits, the dilutive impact of flying at Berlin Tegel, and new accounting standards delaying the recognition of revenue.EasyJet said it made good progress with its cost and operational performance, although both were affected by the impact of drone activity at London Gatwick over the Christmas period.Looking at revenue, easyJet said total revenue in the first quarter to 31 December increased by 13.7% to £1.296bn.Passenger revenue rose 12.2% to £1.025bn, and ancillary revenue improved 19.9% to £271m.Passenger numbers in the quarter increased 15.1% to 21.6 million, which the airline said was driven by an increase in capacity of 18.2% to 24.1 million seats, which was slightly lower than it had planned due in part to the drone issues at London Gatwick, and to late A321 deliveries from Airbus.Load factor decreased by two percentage points to 89.7%, as the board had anticipated, due to the one-off increase in prior year late demand and the dilutive impact of Tegel flying.Total revenue per seat decreased by 4.2% at constant currency, which was in line with easyJet's expectations.That performance was reportedly driven by an increase in underlying revenue per seat of 1.5% due to "robust" underlying demand and "disciplined" capacity growth by competitors on easyJet's markets, supported by easyJet's increasing brand recognition, as well as continued growth in ancillary revenue per seat through better bag and allocated seating sales.It was also driven by the negative impact from the dilutive impact of first time flying in the first quarter at Berlin Tegel, where the schedule was still in the early stages of optimisation, as well as one-off benefits experienced in the 2018 financial year not being repeated, including the Air Berlin and Monarch bankruptcies and Ryanair winter schedule cancellations in the prior year.The impact of the move to IFRS 15 accounting standards, and well as cancelled flights and lost revenue resulting from the drone issue at London Gatwick, also affected revenue performance.On the cost front, easyJet said its underlying cost performance was "solid" and in line with expectations, before the cost impact of the drones at Gatwick.Headline cost per seat excluding fuel at constant currency increased by 1.0% in the quarter, which the board said reflected a £10m cost impact of the drones at Gatwick relating to customer welfare costs, representing around one percentage point of the cost per seat in the quarter.EasyJet said the incident affected around 82,000 customers and led to more than 400 flights being cancelled.That headline cost performance was also put down to the annualisation of crew pay deals, better-than-expected crew retention, and some additional inefficiency relating to Gatwick disruption, as well as ownership costs reflecting new aircraft year-on-year, some additional leasing costs resulting from late Airbus aircraft deliveries, and the impact of IFRS 16 accounting.The airline said its cost programme had continued to deliver "substantial" savings, in particular in airport costs, which was driven by discounts on additional passenger volumes, and fleet up-gauging from A319ceo aircraft to the larger and more efficient Airbus A320neo and A321neo models, although that had been marginally impacted by Airbus delivery delays.A reduced level of cancellations and delays over three hours was also reported, despite the drone issue at Gatwick.EasyJet improved its on-time performance (OTP) since its "difficult" 2018 summer.It said the closure of Gatwick Airport due to the drone issues had a negative impact on OTP, but after adjusting for that, December network OTP was better at 81%.For the quarter overall, on-time performance was reported at 79%, down from 81% in the prior year, however.As it announced in its full-year results in November, easyJet was now reporting monthly passenger statistics within its quarterly reports.It said load factor was slightly lower than the first quarter of 2018 due to one-off prior year benefits and the dilutive impact of Tegel flying.The airline experienced 764 cancellations in the quarter, compared to 1,051 cancellations at the same time a year earlier, with the biggest number of cancellations due to the drone issue at London Gatwick.Passenger numbers for the quarter as a whole totalled 21.592 million, with passenger growth of 15.1% and the load factor standing at 89.7%.EasyJet said it entered into another planned sale-and-leaseback arrangement for 10 of its A319 aircraft, which generated £120m in cash and further facilitated its fleet management strategy.Six were completed during the quarter, and a further four were finalised on 8 January.The board said that would be disclosed as a non-headline item in its income statement, and was currently expected to be a small loss on disposal.On its preparations for Brexit, easyJet said it was "well prepared" with 130 aircraft now registered in Austria, and "good progress" made in ensuring it had a spare parts pool in the EU27 and in transferring crew licences, both of which would be completed by 29 March.It noted that both the EU and the UK had committed to ensure that flights between the territories would continue in the event of a no-deal Brexit.In order to remain owned and controlled by EEA-qualifying nationals, as required by EU regulations, easyJet said it had a number of options, including the use of the provisions contained in its Articles of Association which would permit it to suspend rights to attend and vote at meetings of shareholders, or forcing the sale of shares owned by non-qualifying nationals as well as other potential actions.EasyJet had increased its ownership by qualifying EEA - excluding UK - nationals to around 49%.Looking ahead, easyJet said that despite the consumer and economic uncertainty created by Brexit, demand currently remained "solid" with forward bookings for the period after 29 March "robust".For the year ending 30 September, the airline said it expected full-year capacity to grow by around 10%, with first half growth growth of about 15%.It said that, with approximately 40% of forward bookings secured for the second quarter, revenue per seat at constant currency for the first half was expected to decrease by mid-to-high single digits.That update in its expectations reflected continued positive underlying trading in line with the first quarter, but a larger-than-previously-anticipated phasing impact from the first to second half from the impact of new IFRS 15 accounting standards and the shift of Easter into the second half.IFRS 15 was expected to have a negative impact of around £50m in the first half, and Easter was expected to have a negative impact of around £50m on that period.Both of those would reverse in the second half.A more competitive market in Berlin, as well as constraints on easyJet's ability to deliver network optimisation as quickly as anticipated, were also blamed, with the airline now expecting a loss in the full-year in Berlin.Full-year headline costs per seat, excluding fuel at constant currency, would be about flat, assuming normal levels of disruption, using new IFRS 15 and 16 accounting standards and including the £10m cost impact from the drones issue at London Gatwick.The full-year unit fuel bill was likely to be £10m to £60m adverse, with the total fuel bill expected to be about £1.46bn, which easyJet said reflected a reduction in the price of oil since November and continued higher carbon pricing.Foreign exchange movements would have a £10m adverse impact on headline profit before tax.EasyJet said its expectations for the full-year were "broadly in line" with current market expectations."easyJet has made a good start to the 2019 financial year with robust customer demand and ancillary sales, driving solid revenue generation," said chief executive Johan Lundgren."This was underpinned by good operating and on-time performance across the network, with the exception of the disruption caused by the Gatwick closures due to drone sightings."There has been be a one-off cost impact from this incident, but underlying cost progress is in line with expectations."Lundgren said he was "proud" of the way the airline's teams worked "around the clock" to mitigate the impact of the incident, and looked after affected customers."Recognition of the easyJet brand continues to grow."We made good progress on our strategic initiatives; holidays, business, loyalty and data during the quarter."For the first half of 2019, booking levels currently remained "encouraging" despite the lack of certainty around Brexit for customers, Lundgren said."Second half bookings continue to be ahead of last year and our expectations for the full year headline profit before tax are broadly in line with current market expectations."