Easyjet raises first half guidance after outperforming on passenger revenue
Low-cost airline Easyjet this morning said that they had raised their first half revenue guidance after outperforming expectations for their passenger revenue.
Easyjet’s shares rose over four per cent in early trading.
The figures:
Total revenue for the quarter rose nearly 10 per cent to £1.43bn, up from 1.3bn in the same period last year.
Passenger numbers rose 2.8 per cent to 22.2m, driven by a one per cent increase of capacity to 24.3m seats.
Total airline revenue per seat rose 8.7 per cent to £58.60, up from £53.90 in 2018. Cost per seat rose 4.3 per cent due planned lower growth, new aircraft deliveries and French national strikes, which saw 813 flights cancelled.
The company said it expected to deliver a loss for the first half of 2020 better than that in 2019, with revenue to show a mid to high single digit increase in the period.
The airline added that 75 per cent of their seats for the first half of the year had been added.
Richard Hunter, head of markets at interactive investor, commented “Easyjet has started its new year in fine fettle, with an ongoing focus on costs and increased revenues propelling performance.”
In an open letter to shareholders, entrepreneur Sir Stelios Haji-Ioannou called for earnings per share target of 200p, way ahead of analysts’ forecasts of 110p.
Haji-Ioannou said that the rise would be in line with the growth of Easyjet’s fleet. He added that he would make a token vote against the reelection of chairman John Barton at the general meeting on 6 February as “constructive criticism.”
Why it’s interesting:
This morning’s statement allowed Easyjet to update on two new initiatives that were first announced in November.
In November Easyjet announced a new package holiday business after a “difficult” financial year, in which weak consumer confidence and higher fuel costs hurt the business despite attracting 8.6 per cent more passengers than the year before.
Easyjet expects the venture to break even in its first year, and sees a gap in the market for “a modern, relevant and flexible business”.
However, the decision came less than two months after Thomas Cook, the 178-year-old package holiday pioneer, went out of business.
This morning, the company gave limited details of the package holiday divisions performance so far, 85 per cent of customers cite great value, hotel choice and website ease of use as the primary driver of booking.
In November’s results, Easyjet’s profit before tax plunged 26 per cent to £427m for the 12 months to the end of September.
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However, revenue rose 8.3 per cent to £6.39bn, up from 2018’s £5.9bn, driven by Easyjet’s greater capacity. That also helped passenger numbers grow 8.6 per cent year on year to 96.1m.
The airline followed those results by announcing it would become the world’s first major airline to offset all carbon emissions given off by its flights.
The budget carrier said the measure, which involves stopping deforestation in South America, installing solar panels in India and reducing wood-burning water sanitation in Uganda, would cost around £25m a year until 2022.
Lundgren said the firm would shoulder the cost because it is “the right thing to do”.
According to this morning’s trading statement, 9m customers have flown net-zero flights this year so far.
The budget airline said that the move had seen a improvement in customer satisfaction, with 11 per cent more customers saying they would choose Easyjet the next time they fly as a result of their flight being offset.
The firm also added that Peter Bellew has now joined Easyjet as its chief operating officer.
What Easyjet said:
Chief executive Johan Lundgren commented: “I’m pleased that we have made a strong start to the year with continued positive momentum. The improvement in our revenue per seat has been driven by our self-help revenue initiatives combined with robust customer demand and a lower capacity growth market.
“Easyjet holidays launched successfully with customers looking to benefit from our unrivalled flexibility, great value and handpicked hotels.”