Heatwave fails to put off EasyJet passengers

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Budget airline easyJet reported strong summer trading despite the British heatwave making holidays at home more attractive.

The airline said demand was strong during July’s hot weather and continued into August.

In September it carried 4.8 per cent more passengers than last year.

EasyJet said that profits for the year to September 30 will be at the top end of City expectations.

The group has also benefited from its decision to add flights on routes where rivals have cut back.

This is the second time the airline, which flies from Leeds Bradford airport to Geneva during the ski season, has raised profit expectations after it increased guidance in July when it defied concerns about the impact of the heatwave.

The group now expects annual profits to come in at £470m to £480m, up from previous guidance of £450m to £480m and up from £317m a year earlier.

Revenues per seat are expected to grow by around six per cent in the three months to September 30, driven by strong demand in July and August. This will take second half growth to six per cent.

The upbeat statement was in stark contrast to that of rival Ryanair’s update last month. Europe’s biggest budget airline warned on annual profit, blaming lower demand across the continent and currency issues.

Looking further ahead, easyJet said a quarter of seats for the first half of the year to September 2014 have been sold, in line with the previous year.

On the downside it forecast an increase in its year-on-year fuel bill for the first half of the 2013-14 year of £20m to £30m and a negative exchange rate impact of £10m.

EasyJet was recently given the green light to modernise its fleet after shareholders backed plans to order up to 235 new aircraft – in spite of objections from founder Sir Stelios Haji-Ioannou. It will upgrade and expand its fleet by acquiring 135 Airbus planes over the next nine years. There is also an option to buy a further 100 Airbus planes as part of the deal.

The purchase is expected to allow easyJet to boost passenger numbers from the current level of just over 60 million a year to around 90 million.

Analyst Mark Irvine-Fortescue at Jefferies said: “Brisk trading in the third quarter continued into the fourth quarter.

“EasyJet expects 2013 pre-tax profits to be in-line with current consensus. Next year looks tougher but easyJet’s strong track record and brand, and robust financial position should leave it well placed to sustain profitable medium term growth, if not of the magnitude we have become accustomed.

“2014 will be tougher. We think management is sensible to urge caution into winter 2014.

“2013 finals are due on November 19 where we look for an update on business passenger initiatives, allocated seating, and initial take-up of new routes. With a strong net cash position expected as at September 30 easyJet’s strong balance sheet has led some to speculate a possible special dividend.

“With pre-delivery payments coming out in the second half of 2013 and the first half of 2014 for the new fleet orders, we would be surprised to see such an announcement at this point in the winter season.”

Jonathan Jackson, head of equities at Killik & Co, said: “In the three months to September 30, revenue per seat at constant currency is expected to grow by around six per cent, driven by strong demand in July and August. This is slightly ahead of the previous guidance of up to six per cent. Cost per seat excluding fuel growth at constant currency of around four per cent is expected to be in line with previous guidance.”