Fortunes flying high at budget carrier easyJet

Budget airline easyJet reported better revenues and profits and record passenger and load factor figures for the year to September 30, today (November 20).

The carrier, which flies 62 routes from Manchester Airport, and 29 from Liverpool John Lennon Airport, also announced a 43% increase in its proposed dividend “reflecting a successful year of delivery”.

Turnover of £5.898bn showed a 16% increase, while the reported profit before tax of £445m compared with £385m last year.

It said it flew a record number of passengers, at 88.5 million, up 10.2%, with a record load factor, or available seats sold, of 92.9%, up from 92.6%.

The headline cost per seat, excluding fuel, was up 5.3% to £43.43, mainly due to expansion into Berlin’s Tegel Airport, higher levels of disruption and crew cost inflation

However, it said it achieved cost and efficiency programme savings of £107m, compared with £85m in 2017.

The proposed dividend of 58.6p per share, compares with 40.9p previously, an increase of 43%, subject to approval by shareholders

The airline completed the acquisition of part of Air Berlin’s operations at Berlin Tegel on December 15, 2017, for a consideration of €40m, which, it says, gives easyJet a strong number one position in Europe’s third largest market

It said the total loss before tax of £152m was better than originally expected on acquisition. A headline loss of £112m was higher than expected, but was offset by lower integration costs of £40m.

Operations transitioned to ‘business-as-usual’ with more than 20 easyJet aircraft now flying in Tegel, with good on-time performance and increased brand recognition in the Berlin market

Looking to the future, the airline said it has completed an agreement today with Airbus for 17 firm orders, 18 deferrals and 25 purchase options over the next five years, providing additional delivery flexibility

The group said it will also deliver strong cost control through its focus on value by efficiency, leading the industry in proactively tackling disruption to minimise its impact on customers and cost.

It also aims to become the most data-driven airline in the world, which will improve the customer experience, drive revenue, reduce cost and improve operational reliability.

Johan Lundgren, easyJet chief executive, said: “easyJet has delivered a great performance during the year, growing headline profit before tax by 41%, once again flying a record number of passengers at our highest ever annual load factor.

“The integration of new operations at Tegel has also progressed well and our brand consideration in Berlin has grown strongly.

“Our financial success and increasing customer loyalty demonstrate the resilience of our operations, the underlying strength of our business and our unrivalled customer experience.

“Our strategy continues to ensure we are well positioned for the future.

“We have made considerable progress on our new initiatives in holidays, business and loyalty, which will enable us to grow profitably.

“While disruption continues to be a major challenge for the industry, we are investing in resilience to help to mitigate the impact on our customers.”

He added: “Forward bookings are solid, with 50% of seats sold in the first half, in line with the prior year.

“We are confident in our positioning for the future and are focused on driving future returns, positive free cash flow over the longer term, and maximising our headline profit per seat as we continue to deliver value for our customers and shareholders.”

Russ Mould, investment director at Manchester investment platform AJ Bell, said today: “Today’s full-year numbers from budget airline easyJet demonstrate the benefits of survival in an unforgiving industry which has recently seen several of its peers go to the wall.

“Combine this status with the various headwinds facing major rival Ryanair and it is perhaps no surprise to see the company achieve healthy increases across most metrics.

“However, investors may be more concerned by a 5.3% increase in costs once fuel is stripped out.

“Part of this was linked to its acquisition of operations at Berlin’s Tegel airport, but it also relates to industrial action and higher salaries for its flight crews.”

He said: “Tight control of costs is really important for an airline whose main attraction to flyers remains its low ticket prices.

“The company has done all it can to prepare for Brexit, setting itself up to operate through subsidiaries in the UK, Switzerland and Austria.

“It is close to ensuring more than 50% of its shares are held outside of the UK – which would enable it to continue operating in the EU.”

He added: “EasyJet says UK demand remains strong, despite the threat of disruption from Brexit, but it may be a tough ask for it to match such a strong 2018 performance in its current financial year.”