easyjet delivers solid trading performance after strikes at British Airways and Ryanair boosted demand

EasyJet's chief executive Johan Lundgren Picture: Easyjet/PA
EasyJet's chief executive Johan Lundgren Picture: Easyjet/PA
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Easyjet today said it had delivered a solid performance in the fourth quarter after it experienced robust demand following strikes at British Airways and Ryanair.

EasyJet said it expects to deliver full year 2019 headline profit before tax of between £420 million and £430 million, which is in the upper half of the previous guidance range.

In a trading update, the airline said that the delivery of self-help initiatives had driven outperformance in both passenger and ancillary revenue per seat.

The statement added: "Our cost performance remained strong and in line with expectations despite the difficult Q4 (fourth quarter) disruption environment. Our operational resilience initiative was a driving force behind the strong performance.

Passenger numbers for the full year increased by 8.6 per cent to 96 million, driven by an increase in capacity of 10.3 per cent to 105 million seats. Load factor for the full year will decrease by 1.4 percentage points to 91.5 per cent.

The statement added: "Total revenue per seat at constant currency for the full year will decrease by circa 2.7 per cent. Total revenue per seat at constant currency for the second half will increase by circa 0.8 per cent, an outperformance compared to our previous guidance of 'slightly down'. The drivers of this outperformance are the yield optimisation self-help initiatives delivered in the fourth quarter and increased demand due to strikes at British Airways and Ryanair."

The company said that total headline cost for the full year will increase by around 12.0 per cent due to increased capacity, higher unit fuel costs and adverse foreign exchange movements. This increase was partially offset by improvements in cost per seat ex fuel.

The statement added: "Headline cost per seat excluding fuel at constant currency will decrease by circa 0.8 per cent for the year, in line with previous guidance. Despite a difficult disruption environment experienced in the fourth quarter, which included the impact of storms across Europe and the technical issues experienced at Gatwick airport, the operational resilience initiative was a key driving force behind the strong performance."

The company said that quarter one 2020 forward bookings are currently in line with the same time last year and the expected capacity growth for full year 2020 will be at the lower end of its historic range.

EasyJet plans to provide further details as part of the full year results announcement on Tuesday November 19 2019.

Johan Lundgren, easyJet chief executive said: "easyJet has continued to perform in line with expectations, despite challenging market conditions.

"As a result of our self-help initiatives and the increased demand due to disruption at British Airways and Ryanair, we anticipate achieving headline profit before tax for the full year 2019 of between £420 million and £430 million, in the upper half of our previous guidance range.

"Our implementation of initiatives in the fourth quarter to optimise yield has led to solid revenue performance with total revenue per seat at constant currency set to increase for the full year. We have continued to invest in operational resilience, with the programme successfully reducing the impact of disruption on our operations. As a result, we expect to report a fall in headline cost per seat for the year, excluding fuel at constant currency.

"I would like to thank all our people for their continued tireless work in delivering the warmest welcome in the sky to all our customers."

Richard Hunter, Head of Markets at interactive investor, commented: “The airline industry is tough at the best of times, being one where there are as many factors outside a company’s control as within.

"These outside factors can sometimes be positive, as opposed to the historic negatives of virus outbreaks, volcanic ash clouds, terrorism and adverse weather conditions.

"For example, the current propensity of strike action within the industry has actually played into easyJet’s hand in recent months, given disruption at the likes of British Airways and Ryanair, while the unfortunate demise of Thomas Cook could also provide further opportunities. In the meantime, the company has a laser focus on its own self-help initiatives, with a particular eye on costs and increasing ancillary revenue, the latter of which is always a boost given the wafer-thin margins on which the business operates."