Easyjet ups outlook despite strike hit
● Airline joins others in attacking air traffic control strike action
Easyjet has upped its full-year profit outlook despite taking a financial buffeting from European air traffic control strikes.
The low-cost carrier raised its profit guidance to between £550 million and £590m thanks to strong overall demand from passengers. Its latest outlook compares with previous guidance of £530m to £580m.
In a trading update, the group said revenues in its third quarter rose by 14 per cent to £1.6 billion, while it flew 9.3 per cent more passengers at 24.4 million over the three months.
The crippling air traffic control strikes have left Easyjet with a £25m financial hit from the disruption.
The airline’s chief executive, Johan Lundgren, said he believed there was a case that EU law is being infringed by not adequately protecting flights over France as the European Commission’s failure to tackle the issue is breaching freedom of movement for Europeans. Easyjet plans to file a legal challenge next week.
It comes after Ryanair and British Airways owner Inter-
0 The budget carrier operates a number of routes out of Edinburgh Airport
JOHAN LUNDGREN, CEO
national Airlines Group (IAG) recently revealed plans to join forces for a complaint to the Commission over its inaction regarding the strikes.
Easyjet said it had cancelled 2,606 flights in its third quarter to the end of June due largely to air traffic control strikes, which sent costs soaring by £25m as it has had to compensate customers.
It now expects cost per seat excluding fuel at constant currency to rise by about 3 per cent for the full year mainly as a result of the disruption,
which has so far been greater than seen during the whole of 2017.
Lundgrun said: “It’s been a challenging year so far and we estimate that this will not go away.”
The airline also revealed that the UK’S summer heatwave could hit demand for late bookings in its final quarter, with the recent World Cup tournament also potentially putting some passengers off travelling.
Lundgren told investors: “Easyjet has delivered a strong performance during our third quarter driven by robust customer demand.
“The airline continues to go from strength to strength attracting more than 24 million customers in the period.
“We have also seen the continued growth in ancillary revenues, mainly due to more passengers choosing to buy allocated seating and hold bags.
“With Easyjet on track for a positive summer trading period during the fourth quarter, we are raising our guidance for full-year headline profit before tax for financial year 2018 to between £550m and £590m.”
George Salmon, equity analyst at Hargreaves Lansdown, said: “Intense price competition has caused Easyjet to endure a turbulent time over the last few years.
“However, Easyjet says capacity from the collapse of Monarch remains unfilled, which hints that the overcapacity headwinds that have plagued the sector might be starting to ease.
“Reduced competition is a clear positive, but trends in the wider market are out of Easyjet’s control. We think the results it’s starting to deliver from self-help measures, such as the dramatic increase in ancillary revenues, are particularly encouraging.” There has been a call for governmental support to help boost Scottish firms’ export performance as they continue to show resilience but some weakening expectations amid Brexit concerns, according to a report published today.
The latest quarterly economic indicator survey from the Scottish Chambers of Commerce found that only 15 per cent of businesses polled reported declining optimism, although investment levels softened in sectors that had a challenging first quarter, such as retail and tourism.
Neil Amner of Anderson Strathern and chair of the SCC Economic Advisory Group, said the findings from 375 businesses surveyed show that the economy, “particularly in financial and business services, is maintaining levels of resilience in an uncertain policy environment”.
He continued by saying that UK and Scottish governments “must also continue their active support in enabling the private sector to capitalise on our global business connections to help improve Scotland’s exporting performance.”
“The airline continues to go from strength to strength attracting more than 24 million customers in the period.”