Investment in resilience leads to 'solid' end to year for easyJet

(Sharecast News) - EasyJet reported a "solid" performance in its fourth quarter on Tuesday, with "robust" customer demand and the delivery of self-help initiatives driving outperformance in both its passenger and ancillary revenue per seat.
The FTSE 250 low-cost airline said its cost performance remained strong and in line with expectations, despite a difficult fourth quarter disruption environment, and added that its operational resilience initiative was a "driving force" behind its strong performance.

It said it expected to deliver full-year headline profit before tax for 2019 of between £420m and £430m - in the upper half of its previous guidance range.

EasyJet said its passenger numbers for the full-year increased by 8.6% to 96 million, driven by an increase in capacity of 10.3% to 105 million seats, while its load factor for the full-year was expected to decrease by 1.4 percentage points to 91.5%.

Total revenue per seat at constant currency for the year was set to decrease by around 2.7%, although total revenue per seat at constant currency for the second half would rise by about 0.8%, which was an outperformance compared to the company's previous guidance of "slightly down".

The drivers of that outperformance were the yield optimisation self-help initiatives delivered in the fourth quarter, and increased demand due to strikes at British Airways and Ryanair, the board explained.

Total headline costs for the full-year were increasing by around 12.0%, due to increased capacity, higher unit fuel costs and adverse foreign exchange movements, although the board said the increase was partially offset by improvements in cost per seat, excluding fuel.

Headline cost per seat excluding fuel at constant currency would decrease by about 0.8% for the year, in line with easyJet's previous guidance.

It said that, despite a "difficult" disruption environment experienced in the fourth quarter, which included the impact of storms across Europe and the technical issues experienced at Gatwick Airport, its operational resilience initiative was a "key driving force" behind the strong performance.

EasyJet's total fuel cost for the 2019 full year was expected to be around £1.42bn, which included an adverse impact of foreign exchange and increased emissions trading system costs.

Total headline foreign exchange would have a year-on-year adverse impact of around £14m.

Looking ahead, easyJet said first quarter 2020 forward bookings were currently in line with the same time last year, adding that its expected capacity growth for the 2020 year would be at the lower end of its historic range.

EasyJet's scheduled year-on-year capacity growth in the first quarter was currently around 2%.

The airline said it planned to provide further details on its 2020 financial year priorities as part of the 2019 full year results announcement, scheduled for 19 November.

"EasyJet has continued to perform in line with expectations, despite challenging market conditions," said chief executive officer Johan Lundgren.

"As a result of our self-help initiatives and the increased demand due to disruption at British Airways and Ryanair, we anticipate achieving headline profit before tax for the full year 2019 of between £420m and £430m - in the upper half of our previous guidance range.

"Our implementation of initiatives in the fourth quarter to optimise yield has led to solid revenue performance with total revenue per seat at constant currency set to increase for the full year."

Lundgren said the company had continued to invest in operational resilience, with the programme successfully reducing the impact of disruption on its operations.

"As a result, we expect to report a fall in headline cost per seat for the year, excluding fuel at constant currency.

"I would like to thank all our people for their continued tireless work in delivering the warmest welcome in the sky to all our customers."