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UPDATE 2-EasyJet sees better first half on lower fuel bill

Tue, 27th Jan 2015 11:39

* See first-half losses of 10-30 mln stg, down from 53 mlnstg

* Fuel bill will drop by up to 35 mln pounds in half

* Added 500,000 extra seats on popular routes (Adds shares at nine-month high, more analyst reaction)

By Paul Sandle

LONDON, Jan 27 (Reuters) - British budget airline easyJet said losses in the quieter winter season would shrinkthis year, helped by a lower fuel bill and flying more planes onpopular routes such as London to Geneva.

Europe's second-largest budget airline by passengers afterRyanair said it expected losses of between 10 millionand 30 million pounds ($15-45 million) for the six months to theend of March, down from a loss of 53 million pounds last year.

"We further strengthened our network in the quarter addingaround 500,000 seats, the majority of which are from airportswhere easyJet has a number one or number two position," ChiefExecutive Carolyn McCall said on Tuesday.

A 50 percent fall in the price of crude oil over the lastsix months is cutting jet fuel costs for airlines, though theydo not typically receive the full benefit of lower pricesbecause they hedge to smooth out fluctuations.

EasyJet said its jet fuel bill will be between 30 millionand 35 million pounds lower in its first half compared with aprevious forecast of 12 million to 22 million pounds lower.

Its fuel bill for the full year, which was 1.25 billionpounds last year, would shrink by 90 to 130 million pounds, itsaid, adding that passengers would see fares fall as a result.

SHARES RISE

The airline said it saw strong trading in October,particularly from Britons flying to catch some sun before thewinter months at home, helping revenue per seat rise 3.7 percentin its first quarter to the end of December.

The carrier also upgraded its forecast for growth in revenueper seat for the first half to 2 percent from flat previously.

Shares in easyJet rose to a nine-month high as analysts saidthe outlook was better than expected.

Trevor Green, head of equities at Aviva Investors, said theimproved outlook for revenue per seat was encouraging.

"It is a better quality reason for forecasts to move upwardsthan just on benefits of lower fuel prices," he said.

The stock was trading up 3.5 percent at 1,817 pence at 1120GMT, topping the FTSE 100 index.

"EasyJet is trading well and in the second half should startto see the benefit of recent expansion of capacity at LondonGatwick," said Robin Byde at Cantor Fitzgerald.

The company, which like rivals such as Ryanair tends to makea loss over the winter season when fewer customers fly, postedsales in the quarter of 931 million pounds, up 3.8 percent.

($1 = 0.6626 pounds) (Additional reporting by Kate Holton and Victoria Bryan;editing by David Clarke)

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