* Revenue boosted by pilot strikes at rivals BA and Ryanair
* Highlights challenging market conditions
* Capacity growth to be at lower end of historic range next
year
* Shares drop 5% from five-month high
(Adds shares, detail)
By Alistair Smout
LONDON, Oct 8 (Reuters) - British budget airline easyJet
expects full-year profit towards the top end of
expectations, helped by pilot strikes at rivals British Airways
and Ryanair, it said on Tuesday.
EasyJet shares, however, fell sharply from a five-month high
hit in the previous session, with some brokers disappointed by a
lack of positivity on the underlying outlook given the struggles
of rivals across the sector.
British Airways pilots went on strike for two days last
month, grounding thousands of flights. BA owner IAG said that
the strikes would take 137 million euros ($150.47 million) off
this year's earnings.
Though Ryanair flights ran as scheduled during
industrial action last month, easyJet said the strikes helped to
lift its revenue per seat by 0.8% in the second half, having
previously expected a slight fall.
EasyJet now expects full-year headline pretax profit of
between 420 million pounds ($515.6 million) and 430 million
pounds, said Chief Executive Johan Lundgren, citing increased
demand because of the disruption at British Airways and Ryanair.
It had previously forecast profit between 400 million and
440 million pounds.
While Lundgren also pointed to more price points for seat
selection and hold luggage, as well as measures to make its
fleet more resilient to operational disruptions, he said market
conditions remain "challenging".
The company added that full-year headline costs would
increase by about 12%, partly due to higher fuel prices.
Bernstein analysts said they hope for more detail from next
month's full-year earnings call on whether the boost from
strikes at BA and Ryanair was obscuring underlying trends.
Travel group Thomas Cook collapsed last month, with
the company unable to service its debts and convince banks to
back a rescue plan in the face of changing customer habits and
intense competition from fast-growing airlines such as easyJet
and Ryanair.
EasyJet's expected capacity growth in 2020 is expected to be
at the lower end of its historic range, it said on Tuesday.
"The market was hoping for a more robust commentary, with a
mention to positive pricing trends, with this needed to deliver
reasonable profit growth this year given the less attractive
fuel hedging it has in place compared to last year's rates,"
broker Goodbody said in a note.
"Overall, we see today’s release as disappointing."
($1 = 0.9105 euros)
($1 = 0.8145 pounds)
(Reporting by Alistair Smout
Editing by David Goodman)
International Airlines (IAG)
easyJet (EZJ)
