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EasyJet Fares Set To Gain This Winter

Published on Nov 21 2017 10:16 AM in General Industry tagged: Trending Posts / easyjet / Carolyn McCall

EasyJet Fares Set To Gain This Winter

EasyJet Plc said its fares are set to gain this winter, buoyed by the collapse of carriers including U.K.-based Monarch Airlines Ltd. and capacity cuts at main European rival Ryanair Holdings Plc.

The demise of Monarch and Germany’s  Air Berlin Plc, a bankruptcy filing at Italy’s Alitalia SpA and Ryanair’s move to scrap part of its timetable amid a staffing crisis are “all very good news for EasyJet,” Chief Executive Officer Carolyn McCall said in an interview Tuesday.

EasyJet shares rose the most since June 2016 after the Luton, England-based carrier said that revenue per seat -- a measure of prices -- should now increase by a low to mid-single digit percentage in the fiscal first half through March, excluding the impact of taking over some Air Berlin routes.

McCall, who stands down as chief before the end of the year, said the shakeout of Europe’s airlines has benefited EasyJet structurally and given Europe’s second-biggest discount airline “positive momentum” going into fiscal 2018. The retreat of the carrier’s rivals comes as a boost after the weaker pound weighed on last year’s earnings.

“The first half is looking extremely positive and that is as a direct result of the dislocations in the market,” McCall said on Bloomberg TV. Increases in the price of oil are likely to result in further pressures, she added, so that “the strong will get stronger and the weak will get weaker.” EasyJet itself is “very well hedged.”

The shares advanced as much as 6.7%, the biggest gain since June 28 2016, and were trading 6% higher at 1,355 pence as of 8:49 a.m. in London, taking gains this year to 34% and valuing the company at £5.37 billion ($7.1 billion).

EasyJet’s pretax profit for the year ended September 30 fell 17% to £408 million, according to a statement, in line with guidance given in October, hurt by the slide in sterling and a glut of seating in European markets.

The company said it’s too early to provide guidance for the second half, while estimating that taking over Air Berlin plane leases and slots at the German capital’s Tegel airport will incur losses of about £60 million in fiscal 2018, plus 100 million in one-off expenses. The acquisition should close next month, it said.

McCall joined EasyJet as CEO in July 2010 from Guardian Media Group Plc, and is returning to her roots to head up U.K. broadcaster ITV Plc. She said she has already met with successor Johan Lundgren and will see him a couple more times, while adding “if I have any tips I’m going to give those to him privately.”

News by Bloomberg, edited by Hospitality Ireland

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