EasyJet boosted by rivals' trouble but currency headwinds dent profits

Gladys Abbott
November 22, 2017

Profit tax fell 30.2 percent from previous year to 305 million pounds or 76.8 pence per share.

Easyjet said earnings had continued to climb in the first quarter of this year, "primarily as a result of some capacity leaving the market".

EasyJet also cut its proposed ordinary dividend per share by almost a quarter to 40.9p, with total basic earnings per share dropping 30 per cent, saying it was in keeping with the firm's increased payout policy of 50 per cent of headline profit after tax.

Although the annual report will not show this - with underlying profits before tax for the year to 30 September falling 17% to £408 million largely as a result of currency moves - Easyjet said it expected revenue per seat to grow by a low-to-mid single digit percentage in the last three months of the year.

EasyJet's pretax profit for the year ended Sep.

He said: "We look for a 2% decline over the full year and this looks too conservative given the H1 guidance, particularly as forward bookings are ahead of last year at 88% for Q1 and 26% for Q2".

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Chief executive Carolyn McCall, soon to step down from the post, said: "EasyJet delivered a robust performance during a hard year for the aviation industry".

Difficulties for rivals Monarch, Air Berlin and Alitalia have boosted EasyJet's revenue trends for the first quarter. That came despite an 8 per cent increase in revenues to £5 billion. After seven years at the helm, McCall is to become chief executive of British television channel ITV. The budget airline took 80 million passengers over the course of the year - a growth of 8.5 percent.

In October, EasyJet announced an agreement to acquire part of Air Berlin's operations at Berlin Tegel airport for €40m (£35m).

This "parallel approach", which will include training new crew and sourcing dry-leased aircraft and other expenses, will represent an additional "non-headline" cost of £100 million in 2018, Findlay predicts.

But easyJet said "whatever happens to these slots will be beneficial for us", as it hopes to pick up some slots if they are sold on the open market, while it does not believe rivals would want to compete directly with it.

"A continuous focus on sustainable cost control has put EasyJet at a strategic advantage during a period when there have been bankruptcies and some airlines have struggled operationally", she said.

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