EasyJet up 5% on upgrade
After Ryanair delivered a major profit upgrade, EasyJet also
seems to have been a beneficiary of more solid demand and a more favourable
capacity environment. To wit, the collapse of Thomas Cook has been a boon
for low-cost airlines that operate in regions vacated by the defunct tour
EasyJet upgraded its
outlook to a key revenue metric with the benefits of the
Thomas Cook failure, cost discipline and better ancillary revenues partially
offset by French strikes. To be fair, if any airline worried particularly about
strikes in France they are in the wrong game; it goes with the turf. For H1
management expect revenue per seat to increase in the mid to high
single digits, compared to previous guidance of low to mid-single digits.
Headline loss for H1 is seen better than the -£275m in 2019. FX moves are
seem having a £70m positive impact on headline profit before tax.
EasyJet is probably the
biggest gainer from Thomas Cook’s collapse, particularly as it bagged lucrative
airport slots. EasyJet snapped up 12 summer and 8 winter slots at Gatwick, and
6 summer and 1 winter at Bristol for £36m. Strikes at BA and Ryanair have
also been to the benefit of EasyJet.
Considering the profit
upgrade announced in October, it’s been quite the turnaround since last May
when EasyJet was warning
about higher fuel costs, overcapacity in the
market, the pinch of rising labour costs and FX headwinds all
Key stats for quarter
to end of Dec 2019
- Total group revenue
for the quarter ending 31 December 2019 increased by 9.9% to
£1.425bn. Passenger revenue increased by 9.7% to £1.124bn and
ancillary revenue increased by 10.8% to £301 million.
- Passenger numbers
in the quarter increased by 2.8% to 22.2 million, driven by an increase in
capacity of 1.0% to 24.3 million seats. Load factor increased by 1.6
percentage points to 91.3%.
- Total airline revenue
per seat increased by 8.8% at constant currency, outperforming