easyJet earmarks more growth

Low-fare operator easyJet has revealed a strong set of half-year financial results, with passenger numbers, seat capacity and revenue all rising, although costs also increased.

It has also outlined several focus areas for investment to help it drive returns and profit per seat. The carrier said the strong performance was helped by a positive trading environment and higher load factors across its routes, along with capacity reductions by other airlines in its existing markets.

Passenger numbers for the six months to 31 March 2018 rose by three million to 36.8m, including 700,000 from easyJet’s new Berlin Tegel operations, launched in January this year. Capacity, meanwhile, increased by 7.8% as the airline grew its existing network by 4.6% and added an additional 1.2m seats at Tegel. Load factor grew by 0.9% to 91.1% (91.9% excluding Tegel).

Total revenue rose by 19.5% to £2.183 billion, up from the equivalent figure last year of £1.83bn. Total revenue per seat increased by 10.9% to £54.10 (£48.80 in the same period of 2017).

Headline cost per seat excluding fuel increased by 2.2% to £43.11 (H1 2017: £42.18) due to increased loads, inflationary costs and the impact of severe weather, offset by £66 million of cost savings.

Overall profit before tax (excluding Tegel) was £8m, a £220m improvement over a loss in H1 2017 of £212m. A total loss before tax of £68m for the six months ended 31 March 2018 (H1 2017 loss £236m) principally reflects non-headline costs associated with the one-off integration of Tegel operations and the sale and leaseback of 10 A319 aircraft, it added.


Updated strategy

easyJet is also planning to implement an updated strategy that will now see it invest in enhancing its propositions in holidays, business passengers, customer loyalty and data, where it sees opportunities for further revenue growth.

Capital expenditure for the financial year to 30 September 2018, including the investment in Tegel, is expected to remain in line with previous guidance at £1.2bn, it added.

CEO Johan Lundgren described the six-month profit figure as “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.”

He also flagged up the airline’s milestone of carrying 13m business travellers a year, partly supported by the increase in city to city routes as it successfully started its operations in Berlin Tegel. Lundgren also outlined new investments to better use its data to improve its customer proposition, reduce costs and increase revenue.

He also highlighted that as the oil price continues to rise, “We expect financial pressure to increase on less efficient airlines. easyJet will continue to manage its own capacity growth plans to drive long-term returns. The airline’s strategy will enable it to continue to be a structural winner within its chosen markets in the European short-haul market.”

However, with jet fuel forecast to remain within a $680 metric tonne to $740 metric tonne trading range, easyJet says its own unit fuel bill (excluding Tegel) for the 12 months to 30 September 2018 is likely to fall by between £60-£70m compared to the prior year. Its total fuel cost excluding Tegel for the year to 30 September 2018 is estimated will be approximately £1,120m.


Ancillary revenues up 14%

Ancillary revenue per seat rose by an impressive 14%, due mainly to further innovation and conversion uplift supported by digital acceleration, it added. Specifically, it improved its bag proposition, introducing a new 15kg/23kg offering for its customers, smarter bag yield algorithms and further benefits from its ‘Hands Free’ product.

Cost initiatives delivered £66 million in savings in the half, with the majority relating to airport charges, offsetting underlying inflation. These initiatives included its ongoing up-gauging of its fleet with the addition of 23 186-seat A320 aircraft since 31 March last year. The airline now has 298 aircraft in its Airbus-only fleet and is forecast to carry over 90m customers this year. The average fleet age fell slightly to seven years.

Lundgren also added that easyJet “sees a significant opportunity to transform its holidays proposition, based on its existing network of destinations and frequencies, efficient low-cost operations, its unique customer base and the ability to develop a proposition that is aligned with the easyJet brand. Currently only 500,000 passengers book a hotel with us out of an addressable market of 20m. We see an opportunity to add significant value by forming a dedicated business unit offering a clear and attractive proposition, based on efficient technology and data.”

He also confirmed that on 14 May the UK Civil Aviation Authority had confirmed the airline had been awarded a new UK Air Operator Certificate (AOC). easyJet plans to transfer its UK-based fleet across to this AOC in June, with its Luton-based group operations will continue to support all three standalone AOCs in Austria and Switzerland as well as the UK.


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