Rise in summer bookings prompts easyjet to lift profit forecasts
FULLER aeroplanes and more website visitors booking flights have helped low-cost carrier easyjet crank up profit expectations after a recent drop in earnings.
The orange-liveried carrier, whose chief executive Dame Carolyn Mccall this week confirmed her forthcoming departure to ITV, increased load factors – the industry measure for a how full its planes are – by 1.1 percentage points in the past three months. More of the seats on its summer flights are booked than was the case last year.
The fact that Easter fell in the reporting period this year resulted in a £55m uplift in sales compared to 2016.
The airline also said that the design of its new website was converting a higher proportion of visits into bookings, and a new algorithm had made it better at pricing flights based on demand.
The Luton-based carrier now expects headline pre-tax profits for its current financial year, ending in September, to be between £380m and £420m. This is above the current consensus among analysts of £375m, according to Bloomberg, but still below the £495m statutory figure it hit in 2016. It is also well below the 2015 figure of £686m.
Although some analysts raised their profit expectations on the back of the results, the company’s shares fell 5.9pc to £13.34 on the third quarter numbers.
This was most likely because revenue per seat – a key industry metric – is likely to fall by 2pc in the second half of the financial year. Andrew Findlay, its chief financial officer, said some of what had been announced in the trading update was included alongside confirmation of Dame Carolyn’s departure earlier this month, to help reassure investors.
Various initiatives to help keep costs under control at the airline would continue, he added, including using its size to negotiate better airport and baggage handling charges.
Dame Carolyn said easyjet had not changed the way it approached the pricing of its flights on the back of continued excess capacity in the sector, supported by the low fuel price.
Asked if she had any advice for her successor, she said she “won’t be talking about that publicly”, adding it was “business as usual and there is lots still to do”.
Meanwhile, easyjet has struck a deal with DHL for the logistics firm to handle the baggage of its 9 million Gatwick passengers from November.