Easyet to deliver bumper profits as it benefits from rivals troubles
EasyJet will deliver a bumper rise in profits this year as it shrugs off industrial action and benefits from the woes of rivals.
The budget airline said that following a strong fourth quarter, it expects headline profits for the full year to come in between £570 million and £580 million.
This compares with £408 million it booked in 2017.
The solid results come despite strike chaos that caused easyJet to cancel more than a thousand flights in June as a result of air traffic control industrial action in France and Italy.
EasyJet said it has also benefited from a number of “one-off events”, including the bankruptcies of Monarch and Air Berlin, as well as cancellations at Ryanair.
Chief executive Johan Lundgren said: “EasyJet expects to deliver a strong performance in both quarter four and the full year, driven by better-than-expected growth in passenger and ancillary revenues, as well as reduced losses at our Tegel operation.
“We now expect our headline profits for the year to be between £570 million and £580 million, at the top half of our guidance range. This has been achieved despite higher costs caused by disruption due to third party industrial action and severe weather.”
EasyJet also saw better-than-expected growth in passengers in the fourth quarter, with annual revenue expected to hit £5.9 billion.
Passenger numbers for the full year, excluding its Tegel operations in Germany, are expected to increase by 5.4% to 84.6 million, driven by greater capacity. The load factor for the full year is expected to rise by 1% to 93.6%.
Total revenue per seat, excluding Tegel, is set to increase 6.5%, or 5% at constant currency.
George Salmon, an Equity Analyst at Hargreaves Lansdown, said: “Generally, aviation is a tough game. Fortunes are influenced by lots of factors outside companies’ control – weather, the oil price and strikes to name just three. Recent years have also shown that even when macro conditions give carriers a tailwind, intense competition can limit growth.
“One area easyJet has more control over is its cost base. Unfortunately non-fuel costs are heading up again, and while easyJet has blamed exceptional circumstances like adverse weather and industrial action, we can’t help but notice they aren’t expected to fall back next year.
“Underlying cost control and continued improvements in the recently acquired Tegel operations must be the priorities for the new CEO.”