easyJet on solid ground despite loss-making 1H16

While easyJet managed to maintain a strong load factor of 89.7% for the first half of 2016 (1H16) through disciplined capacity growth, the carrier reported a loss of £24m as the result of recent terrorist events and an adverse foreign exchange impact.
Capacity increased by 7.4% from 32.2m seats in 1H15 to 34.5m seats in 1H16, while passenger numbers grew by the same amount from 28.9m to 31m across the same respective periods.
The carrier’s cost per seat decreased by 4.3% including fuel on a constant currency basis, with total cost per seat decreasing by 5% on a reported basis to £51.98, primarily due to lower fuel costs. However, revenue per seat decreased by 4.2% year-on-year on a constant currency basis, and by 6.6% per seat on a reported basis to £51.29.
easyJet’s total revenue for 1H16 increased by 0.3% from £1,767m in the first half of 2015 to £1,771m. The constant currency profit before tax for 1H16 stood at £5m (in comparison to £7m in 1H15), but the adverse foreign exchange impact amounted to £33m, including £4m relating to balance sheet revaluations.
“easyJet has delivered a robust financial performance during the half year despite the well-publicised external events,” commented easyJet’s CEO, Carolyn McCall. “Underlying consumer demand has been strong, with UK beach traffic providing a healthy start to the half and easyJet’s biggest-ever ski season helping to deliver increased passenger numbers and higher revenue during H1.
“Consumers have enjoyed lower fares, which have decreased by 6% year-on-year, the second successive year of falling fares, as the benefits of lower fuel costs are passed on to passengers. Active cost control by the airline has helped maintain margins,” McCall continued. “We are confident that over the full year we will again grow passenger numbers, revenue and profit. As a result of the easyJet balance sheet and the Board's confidence in the future success of the business, the annual dividend payout ratio will increase by a quarter to 50% subject to AGM approval.”
In the six months to 31 March 2016, easyJet returned £219m (55.2 pence per share) to shareholders via ordinary dividends at a payout ratio of 40% for the year ended 30 September 2015.

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