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Half-year pre-tax loss for easyJet, but better underlying trend

easyJet has reported a pre-tax loss (underlying) of £78.7 million for the six month period ending 31 March 2010, compared with an underlying pre-tax loss of £129.8 million in the six months up to 31 March 2009.

This result, which was 39.4% better in the more recent period, was based on revenues of £1,107.7 million – a rise of 13.3% compared with the £1,032.8 million achieved in the respective period one year previously.

The underlying pre-tax loss was slightly better than the Board’s guidance. The company says the £51.1 million reduction in underlying pre-tax loss compared to the prior year was driven by a unit fuel cost decrease equivalent to £80 million, partially offset by lower interest income of £11 million and £25 million of lost contribution and additional cost due to unusual snow disruption.

Total revenue per seat grew by 5.1% (and by 0.8% at constant currency), driven by good consumer demand, ancillary revenue growth and a 1.4% increase in sector length, says the airline.

The operating cost per seat (excluding fuel and currency movement) increased by 4.3% for the half year mainly because of the impact of the snow disruption in December and January. Excluding this, operating cost per seat rose by 1.9% (excluding fuel and currency movement)

easyJet also reports strong positive cash flow generation with cash and money market deposits increasing in the six months by £283 million to £1,358 million (excluding restricted cash of £101 million). The company adds that it now has sufficient resources in place, through a combination of undrawn committed facilities and surplus cash, to fund future aircraft deliveries for at least the next 18 months.

easyJet says its position in the European short haul aviation has strengthened and that it has increased its share of this market from 6.5% to 7.6% over the past 12 months.

Originally, the estimated full year pre-tax profit was given as being in the range of £175 million to £200 million at current exchange rates and fuel price, prior to the recent volcanic ash related disruption. This disruption has caused additional cost and lost contribution estimated at between £50 million and £75 million, so the company has revised its profit expectations for the year to a range of £100 million to £150 million, again at current exchange rates and fuel price.

“easyJet will deliver substantial profit growth in 2010 through the worst recession in 70 years and even after absorbing snow and volcanic ash related disruption costs from the worst snowfall in 30 years and an unprecedented five day closure of much of European airspace,” commented Andy Harrison, easyJet chief executive (pictured). “We expect to grow our passenger numbers by around 10% and increase both yield and load factor. This is a remarkable performance based on strong European-wide consumer demand for our low cost network of primary routes which offers the lowest prices to the most convenient airports.”

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