EasyJet looks to bigger planes to limit costs after tough first half

LONDON: British budget airline easyJet said it was looking to bigger planes to help keep a lid on costs after it reported a larger than expected first-half loss.

Europe’s largest low cost carrier after Ryanair said the weak pound and the late timing of Easter this year had hit its first-half results, sending its shares down more than 7 per cent, although it still expects a full-year profit.

The company announced that it had arranged to convert part of an Airbus order to larger planes, which would cut costs per seat, and was also postponing some orders of smaller planes.

At the same time, it was seeing signs that revenue pressure was easing with rivals holding back on growth in some of its big markets.

“Our bookings for the summer are ahead of last year showing that demand to fly remains strong,” chief executive Carolyn McCall said.

EasyJet reported a headline pre-tax loss of 212 million pounds (US$273 million) for its first half, widening from a 21 million pound loss a year ago and higher than Thomson Reuters estimates for a loss of 195.75 million pounds.

The airline, which often makes a loss in winter and a profit in summer, said it was comfortable with the market consensus for full year pre-tax profit of 367 million pounds.

It also stuck to a target to keep costs per seat flat in its 2019 financial year compared with 2015, although they are due to rise this year by 1 per cent.

“We said it would be a bit of a bumpy ride as we make some investments,” Chief Financial Officer Andrew Findlay told analysts when asked about cost targets.

The first half figures included an estimated 45 million pound hit from Easter falling into the second half of its financial year this year, and a negative net currency impact of 82 million pounds.

EasyJet shares were down 7.5 per cent in afternoon trade but they had risen around 40 per cent in the past three months.

“The recent share price rally needed an upgrade, in our view, with too much hope that better long-haul trading seen at flag carriers would come to pass in short-haul too,” said analysts at Panmure Gordon. — Reuters