Easyjet profits set to soar after capitalising on Monarch collapse

Easyjet is set to report soaring profits for the year after capitalising on the collapse of rivals Monarch and Air Berlin.

The low-cost airline is expected to report full-year pre-tax profit of between £570-580m, in the upper half of its previous guidance and up from £385m the previous year, and revenue of £5.9bn.

The carrier has taken advantage of the collapse of rivals Air Berlin and Monarch – in October last year – and the cancellation of Ryanair flights in the winter.

But shares in Europe's second-largest airline, behind Ryanair, have nosedived more than a third since June as higher fuel costs, Brexit uncertainty and the lacklustre performance of industry peers concerned investors.

Analysts said investors should be looking out for other signs of growth in the future when its full-year results are published on Tuesday.

“A lot of Easyjet's tailwinds have come from forces outside its control, like the collapse of rival Monarch and reduced fuel costs,” George Salmon, analyst at Hargreaves Lansdown, said.

“We would like to see a downturn in costs per seat. Easyjet's non-fuel costs are rising, and if tailwinds run out of puff that can quickly become a problem.”

Looking forward to the 2018/19 financial year, Easyjet said revenue per seat would drop by low to mid-single digits and that fuel costs could keep costs per seat flat.

AJ Bell analyst Russ Mould said the real interest would lie in Easyjet's outlook for the coming financial year.

He said the “key moving parts” would be capacity growth, which the company had targeted at a 10 per cent increase, currencies, which could negatively impact the airline by £10m and fuel costs expected to rise £55-105m a six per cent year-on-year increase.