easyJet reports solid quarter

Dino D'Amore
By Dino D'Amore January 26, 2016 20:46

easyJet reports solid quarter

During the quarter ending December 31, 2015, easyJet passengers carried increased by 8.1% to 16.1 million, as capacity grew by 7.3% to 17.8 million seats and the load factor increased by 0.6 percentage points to 90.3%.

The airline reports that strong revenue per seat performance in October was offset by the impact of the tragic events in Egypt and Paris, resulting in lower demand and yield in November and December. Forward bookings for the second quarter are showing a marked improvement in revenue per seat compared to November and December. For the first quarter as a whole revenue per seat was down by 3.7% at constant currency.

Total revenue was robust at £930 million, 0.1% down on the prior year as revenue generated by increased passenger volumes and a higher load factor was offset by reduced revenue per seat and negative foreign exchange movements of £32 million.

Cost per seat decreased by 3.7% at constant currency, as a result of robust management action and acceleration of the delivery of our cost improvement plans, as well as the benefit of a low fuel price. Cost per seat excluding fuel at constant currency increased by 1.3%, which is better than previously communicated in November 2015.

easyJet secured credit ratings at the beginning of January from Moody’s (Baa1 Stable) and Standard & Poor’s (BBB+ Stable) and announced a £3 billion Euro Medium Term Note Programme which reflects easyJet’s leading positioning at many of Europe’s top airports, strong cost position and strong balance sheet. This is part of easyJet’s capital review and will facilitate access to new sources of funding.

Cash and money market deposits were £743 million and net cash was £266 million as at 31 December 2015 demonstrating easyJet’s continued strong balance sheet.

As a result of the robust cost performance, low fuel price, disciplined capacity allocation and resilient trading, the Board’s expectations for profit before tax for the year to 30 September 2016 remains in line with market expectations.

Commenting on the results, Carolyn McCall, easyJet Chief Executive said: “easyJet’s excellent customer proposition combined with low oil prices has allowed it to offer lower fares which has driven an 8% increase in passenger numbers in the first quarter.

“The easyJet customer-centric strategy of giving passengers low fares to primary airports continues to be executed well. This year we will consolidate that with a relentless focus on cost reduction which is already delivering. This will ensure that easyJet continues to win and continues to grow revenue, profit and dividends.”

easyJet continues to derive a cost benefit from low oil prices. It is estimated that at current exchange rates and with jet fuel remaining within a $350 metric tonne to $450 metric tonne trading range, easyJet’s unit fuel bill for the first half of the financial year is likely to decrease by between £75 million and £85 million compared to the six months to 31 March 2015. For the full year on the same basis it is estimated easyJet’s unit fuel bill for the year ending 30 September 2016 is likely to decrease by between £165 million and £180 million compared to the year ending 30 September 2015. This is an improvement on its full year results.

easyJet hedges forward, on a rolling basis, between 65% and 85% of the next 12 months anticipated fuel and currency requirements and between 45% and 65% of the following 12 months anticipated requirements.

Taking advantage of the low fuel environment easyJet plans to grow capacity, measured in seats flown, by around 8% for the half year and by around 7% for the full year before the effects of disruption.

The airline states that is “continuing to take firm management action on cost. Cost per seat excluding fuel at constant currency for the six months to 31 March 2016 is now expected to increase by around 1.0% and for the 12 months to 30 September 2016 is expected to be between flat and a 1% increase, assuming normal levels of disruption. This is much better than planned and a further update on cost will be given at the half year results.”

As a result of the strong cost performance, low fuel price, disciplined capacity allocation and resilient trading, the Board’s expectations for profit before tax the year to 30 September 2016 remains in line with market expectations.

Dino D'Amore
By Dino D'Amore January 26, 2016 20:46