Passenger boost lifts profit hopes at budget airline

BUDGET airline easyJet lifted its profit expectations yesterday after a rise in the number of passengers travelling from the UK to beach destinations last month boosted sales.

A total of 4.8 million passengers travelled with easyJet in September, an increase of eight per cent compared with last year. The airline said this would lift total revenues per seat in the fourth quarter by at least six per cent, reflecting demand for "UK to European beach and city routes".

The group increased its profit hopes for the year to September 30 to "slightly ahead" of 150m, which was the top end of its previous forecast of 100m to 150m.

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The financial impact of the volcanic ash cloud disruption earlier this year has also been slightly downgraded from 65m to 60m, as the overall picture of compensation claims paid out by the airline becomes clearer.

But this was offset by 6m of compensation costs caused by air traffic controller strikes in France, Spain and Greece in September.

The robust performance follows a similarly positive set of figures from British Airways, signalling an upturn for the embattled air travel industry.

Carolyn McCall, easyJet chief executive, hailed the group's performance but urged governments to step up pressure on air traffic controllers to end ongoing strike action.

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She said: "This robust financial performance in a tough trading environment is a tribute to easyJet's unique blend of the lowest prices to the most convenient airports. I'd like to thank the whole team at easyJet for their commitment and hard work over what has been a very tough year in the airline industry.

"The significant disruption caused to millions of passengers across Europe, however, demonstrates the urgent need for European governments and the European Commission to modernise Europe's outdated system of air traffic control providers and to end the ongoing strike action."

Shares in easyJet were up nearly 10 per cent, sending the company to the top of the FTSE 250 Index, after the trading update, which comes despite a period of turbulence in the airline's boardroom.

Founder Sir Stelios Haji-Ioannou stepped down as a director earlier this year in a row over strategy. Sir Stelios, who along with his family owns 38 per cent of the business, also threatened to withdraw the use of the "easy" brand unless it improved its punctuality performance.

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Wyn Ellis, analyst at Numis Securities, said easyJet's trading update was encouraging but added that he remained cautious over the airline's outlook as the "Stelios issue rumbles on".

He said: "Differences between Sir Stelios and the board appear deep rooted and it is difficult to see an amicable resolution."

Gert Zonneveld, analyst at Panmure Gordon, was more upbeat, retaining a "buy" recommendation and a 550 pence target price on the company.

He said: "As a result of the strong revenue performance, we have increased our earnings per share forecasts to 27.1 pence from 20.8 pence."

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Yesterday, BA said 3.04 million people travelled with the airline in September this year – a 3.4 per cent rise on last September.

The airline posted a fall in traffic to Asia Pacific, but increases in passengers travelling on Africa and Middle East routes, UK and Europe and North and South America.

Shares in easyJet closed last night at 433.30p, up 12 per cent. BA closed at 266.10, up 4.5 per cent.

Grounded at Robin Hood airport

EasyJet disappointed managers at Yorkshire's newest airport last month when it announced it was pulling its services a mere six months after launch.

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The budget carrier blamed poor passenger numbers for its decision to abandon operations from Robin Hood Airport in Doncaster from January 4.

Flights to Amsterdam, Barcelona, Faro, Palma and Prague began on April 19 and airport and airline executives predicted a bright future for the services. But Robin Hood Airport revealed flights to Amsterdam had been just 72 per cent full, leading to the easyJet decision.

Nick Smillie, director of aviation sales at the airport, blamed the low passenger numbers on the scheduling of the flight, which leaves at 2pm daily, making it unattractive to business travellers and operational restrictions which affected the viability of the operation.