Best winter results for budget carrier easyJet

Budget carrier easyJet said it delivered its best winter trading performance in the first six months of its financial year, with passenger numbers and revenues up, and a lower seasonal pre-tax loss.

The airline traditionally delivers a loss during winter, producing profit in the busier summer period, which it hopes to capitalise on by announcing today plans to boost its easyJet Holidays operation.

Announcing results for the six months to March 31, it said revenues rose 19.5% to £2.183bn, and its pre-tax loss of £68m was £168m better than the same period last year.

And it said, excluding the costs of setting up operations in Berlin’s Tegel airport, it made a headline pre-tax profit of £8m, compared with a £212m loss last year.

The carrier, which flies 52 routes out of Manchester, and 31 from Liverpool John Lennon Airport, said seat capacity rose 7.8% to 40.4m in the six months, while its load factor, or the number of available seats sold, was 0.9% better at 91.1%.

Passenger numbers jumped by 8.8% to 36.8m, including 13m business travellers, and 700,000 from the Tegel operation which opened in January.

Among the factors that led to its positive performance during the period were a positive trading environment and higher load factors on its routes, capacity reductions by other airlines in easyJet markets, and the partial movement of Easter into the first half from the second half in 2017.

The operator also said its business and strategy are underpinned by its ‘sector-leading’ balance sheet strength, with a net cash position of £665m, compared with £353m last year.

Forward bookings are ahead of the same time last year, at 80% for the third quarter, and 57% for the second half.

This will help the airline achieve a headline pre-tax profit for the year to September 30, of between £530m to £580m, it said, after capital expenditure during the year of £1.2bn.

Commenting on the results, chief executive Johan Lundgren said: “easyJet has delivered an excellent performance, reporting a profit of £8m, one of our best results ever in the winter trading period, excluding the one-off impact of the start-up of our Tegel operation.

“Total revenue was above £2bn for the first time, up almost 20% year-on-year.

“This was driven by a record number of passengers at 37m and our highest ever ancillary sales due to giving passengers more options and lower prices on hold luggage along with our improved inflight bistro.

“Our performance was helped by the reductions in capacity from other airlines but was also driven by the strength of the easyJet brand which is now the most considered airline brand in the UK, moving ahead of BA for the first time.

“We also reached the milestone of carrying 13m business travellers a year – partly supported by the increase in city-to-city routes as we successfully started operations in Berlin Tegel.”

He added: “Turning to our strategy, I have today announced an increase in investment in easyJet Holidays to gain a greater share of that market, showcased a series of initiatives to increase the number of passengers travelling on business, and revealed plans to introduce a new loyalty programme which will support and reinforce all of these initiatives and will further increase passenger loyalty to easyJet.

“I also outlined new investments to harness the power of our data to improve our customer proposition, reduce costs and increase revenue. All of these initiatives will provide higher profit per seat and higher returns for our shareholders.”

Russ Mould, investment director at Manchester investment platform AJ Bell, said: “A bumper first half set of results and various new initiatives like a loyalty scheme and investment to properly develop a holiday business would suggest a new lease of life for low-cost airline easyJet.

“Passenger numbers have gone up, it is making money from each person flying and costs are only increasing by a small amount.

“Furthermore, forward bookings are ahead of last year. All in all, chief executive Johan Lundgren has every reason to be smiling on this sunny day in May.

“Admittedly some of the recent performance was helped by reduced capacity from other airlines, but easyJet is clearly doing something right to be pushing up the important performance metrics.

“It’s the simplest things that sometimes work and a loyalty scheme certainly could be easy to roll out and help improve customer stickiness.

“The holiday investment also looks interesting with city breaks, ski and beach holidays, although that is clearly as competitive a market as the airline industry.

“EasyJet has the advantage of a well-known brand and, given that travellers already have strong trust in the business for the flying side, getting them to add accommodation in the same transaction could be an easy win for the group as long as the price is right.”

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