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(Alliance News) - Airline easyJet PLC on Tuesday said it expects a narrowed half-year loss with current operations running broadly as planned despite wide-spread reports of disruption.
For the first half to March 31, the budget airline expects to report revenue of GBP1.50 billion, with headline costs around GBP2.05 billion. It has guided for a headline pretax loss in the range of GBP535 million to GBP565 million, which would be narrowed from GBP701 million year-on-year.
"First half losses have reduced year on year, outperforming expectations, as self-help measures including network optimisation, ancillary products, and a continued cost focus deliver. This result is despite ongoing challenges from Covid-19, rising fuel prices, the removal of furlough support and incremental costs associated with ramping up operations," Luton-headquartered easyJet explained.
The firm said summer bookings for the last six weeks have tracked ahead of pre-pandemic levels as travellers book closer to departure.
easyJet expects its third quarter capacity to be about 90% of the same period in 2019, while capacity in the fourth quarter should "remain near" the level seen in the final quarter of 2019.
"Since travel restrictions were removed, easyJet has seen a strong recovery in trading which has been sustained, resulting in a positive outlook for Easter and beyond, with daily booking volumes for summer currently tracking ahead of those at the same time in FY19," said Chief Executive Johan Lundgren.
The company added that it has "flown 94%" of its planned scheduled in the last seven days, despite an increase in staff testing positive for Covid-19 as well as normal operational disruption such as weather.
easyJet's update comes after dozens of UK flights were cancelled on Monday as airlines continue to struggle with staff shortages.
International Consolidated Airlines Group's British Airways axed at least 64 domestic or European flights to or from Heathrow. easyJet cancelled at least 25 flights to or from Gatwick, affecting routes between the West Sussex airport and Amsterdam, Copenhagen, Glasgow and Milan.
There has been a surge in demand for flights as many families have travelled abroad for the school Easter holidays, which are the first since the UK's coronavirus restrictions for international travellers were dropped.
Airlines have been keen to attract as many bookings as possible after suffering huge losses due to the virus crisis but are struggling to cope with staff shortages. The issue is partly caused by difficulties finding new recruits and getting their security checks processed after thousands of jobs were cut during the pandemic.
Shares in easyJet were up 1.7% at 551.14 pence in London early Tuesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.9% at 7,550.73
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Hang Seng: up 0.7% at 21,357.71
Nikkei 225: closed down 1.8% at 26,334.98
S&P/ASX 200: closed down 0.4% at 7,454.00
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DJIA: closed down 413.04 points, 1.2%, at 34,308.08
S&P 500: closed down 1.7% at 4,412.53
Nasdaq Composite: closed down 2.1% at 13,411.96
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EUR: down at USD1.0858 (USD1.0889)
GBP: down at USD1.3006 (USD1.3040)
USD: up at JPY125.59 (JPY125.52)
Gold: up at USD1,957.00 per ounce (USD1,952.48)
Oil (Brent): up at USD100.94 a barrel (USD98.80)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's key economic events still to come
11:00 CEST Germany ZEW indicator of economic sentiment
08:30 EDT US CPI
08:30 EDT US real earnings
08:55 EDT US Johnson Redbook retail sales index
10:00 EDT US IBD/TIPP economic optimism index
14:00 EDT US monthly treasury statement of receipts
16:30 EDT US API weekly statistical bulletin
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The UK unemployment rate for the three months to February was 3.8%, falling below the 3.9% registered for the three months to January. Market forecasts - according to FXStreet - had predicted unemployment to remain steady at 3.9%. The number of job vacancies in January to March 2022 rose to a new record of 1,288,000. The Office for National Statistics added: "However, the rate of growth in vacancies continued to slow down. Over the quarter the number of vacancies increased by 50,200 with the largest increase in human health and social work."
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The annual German inflation rate was confirmed at 7.3% in March, ahead of the 5.1% figure seen in February. Destatis noted March's reading saw inflation reach its highest level since German reunification - as energy prices continue to soar. Versus the previous month, consumer prices jumped by 2.5%. Harmonised inflation, which allows for EU-wide comparison, increased to 7.6% annually in March and 2.5% month-on-month. The new inflation reading comes days before the latest rate decision from the European Central Bank on Thursday afternoon, which is under pressure to combat rising prices around the continent.
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The already-high US inflation rate likely climbed even further last month, the White House warned Monday, amid a spike in energy prices caused by Russia's invasion of Ukraine. "We expect March headline inflation to be extraordinarily elevated," White House Press Secretary Jen Psaki told reporters ahead of the Tuesday release of the closely watched consumer price index data. The world's largest economy has seen prices rise at record rates as it recovers from the Covid-19 pandemic, with CPI increasing 7.9% over the 12 months to February, its fastest rate in four decades. A range of factors have propelled the price hikes, including component and labor shortages, shipping delays and strong consumer demand spurred by government stimulus policies. The March report will be the first to fully encompass the fallout from Russia's invasion of its neighbor and the sanctions imposed by the West in retaliation, which have combined to cause a spike in prices for energy, including gasoline.
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BROKER RATING CHANGES
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JPMorgan cuts Rolls-Royce to 'underweight' (neutral) - price target 75 (140) pence
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Goldman Sachs starts Intermediate Capital with 'buy' - price target 2480 pence
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Berenberg raises Bank of Ireland to 'buy' (hold) - price target 7.50 (4.60) eur
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COMPANIES - FTSE 100
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Electrocomponents confirmed it expects over 25% like-for-like revenue growth for financial 2022. The distributor of industrial and electronics products said its like-for-like revenue will jump 26% in the year ending March 2022, which follows 23% growth in the fourth quarter. Electrocomponents noted its growth in the final quarter advanced from the third quarter's 21% growth, but was unable to match its performance in either the second or first quarters.
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COMPANIES - FTSE 250
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Online trading platform Plus500 said its revenue in the first quarter jumped a third despite the firm seeing a 62% drop in new customers. Revenue for the three-month period to March 31 rose 33% year-on-year to USD270.9 million from USD161.1 million, with earnings before interest, tax, depreciation and amortization also rising 33% to USD161.6 million from USD70.9 million. Plus500 recorded a 62% year-on-year drop in new customers in the first quarter to 33,740 from 89,406, but noted a 2% rise from the fourth quarter of financial 2021. Active customers were down 35% to 176,642 from 269,743, but, again, were up on the fourth quarter - rising 3%. Average revenue per user more than doubled year-on-year to USD1,534 from USD753. "At the current time, the board anticipates that revenue for financial 2022 will be ahead of current market expectations and continues to expect that Plus500 will deliver sustainable growth from all of the group's product offerings over the medium to long term," Plus500 added.
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Price comparison website Moneysupermarket.com Group said it was "pleased" with the performance of its Money and Travel businesses in the first quarter - as the firm's total revenue increased on the year before. In the three months to March 31, total revenue rose 8% to GBP92.3 million from GBP85.5 million, with its Money business seeing 37% growth and Travel jumping sharply. The firm's largest business - Insurance - saw a flat revenue performance. Chief Executive Peter Duffy said: "With cost-of-living increases adding pressure to consumer budgets, our distinctive brands remain well positioned to help households save money in a broad range of areas."
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COMPANIES - SMALL CAP
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The UK Financial Reporting Council said it has opened an investigation into the audits conducted by Deloitte of Go-Ahead Group, covering the financial statements for the years ended July 2021, June 2020, June 2019, June 2018, July 2017, and July 2016. The publication of Go-Ahead's financial 2021 results was delayed to February from December to allow auditor Deloitte to consider the implications of a review of the London & South Eastern Railway franchise, operated by Go-Ahead. The UK government found that "serious errors" were made by LSER in its dealings with the Department for Transport over several years.
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COMPANIES - GLOBAL
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Japanese automaker Honda Motor said it will invest nearly USD40 billion into electric vehicle technology over the next decade as it works towards switching all sales away from traditional fuel cars. Honda said in a statement that it plans to launch 30 EV models by 2030, with an annual production volume of more than two million units. The company said it would allocate around JPY5.0 trillion, around USD39.9 billion, over the next 10 years "in the area of electrification and software technologies to further accelerate its electrification". The investment is the latest step in its push to have electric and fuel cell vehicles account for 100% of all sales by 2040, a target announced a year ago.
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Japanese giant Sony Group and Lego's Danish parent firm announced Monday a USD2 billion investment in US gaming powerhouse Epic Games for its work toward joining the metaverse vision for the internet's future. Scores of tech firms have been rushing to invest in building the metaverse, a loose term covering the growing eco-system of interactive online worlds, games and 3D meeting places that are already attracting millions of users. In the form of video games like Epic's hit Fortnite, the precursors of the metaverse already exist in a minimalist way, with people coming together not only to play, but also to interact and participate in events. The USD2 billion in funding is aimed at advancing Epic's "vision to build the metaverse and support its continued growth," the three firms said in a joint statement.
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Meta Platforms, the parent company of Facebook and Instagram, will give content creators the opportunity to sell virtual items to users in Horizon Worlds, its main platform in the metaverse, the company said Monday. "For example, someone could make and sell attachable accessories for a fashion world or offer paid access to a new part of a world," the Californian tech group said in a press release. The metaverse, touted by Meta and other companies as the future of the internet, consists of a set of parallel "universes" accessed primarily through augmented and virtual reality platforms. It already exists in a basic way in the form of video games such as Minecraft, Fortnite and Roblox and social platforms such as Horizon Worlds, and VRChat, where people come together not only to play, but also to interact and participate in events.
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Tuesday's shareholder meetings
abrdn China Investment Co Ltd - AGM
Phoenix Copper Ltd - AGM
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By Lucy Heming; lucyheming@alliancenews.com
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