EasyJet Uplift Fails To Pierce Airline Industry Clouds
British budget airline easyJet has said that it expects full-year profit to be towards the top end of expectations, helped by pilot strikes at rivals British Airways and Ryanair. EasyJet shares, ho...
British budget airline easyJet has said that it expects full-year profit to be towards the top end of expectations, helped by pilot strikes at rivals British Airways and Ryanair.
EasyJet shares, however, fell sharply from a five-month high hit in the previous session, with some brokers disappointed by a lack of positivity on the underlying outlook given the struggles of rivals across the sector.
British Airways pilots went on strike for two days last month, grounding thousands of flights. BA owner IAG said that the strikes would take €137 million off of this year's earnings.
Though Ryanair flights ran as scheduled during industrial action last month, easyJet said that the strikes helped to lift its revenue per seat by 0.8% in the second half, having previously expected a slight fall.
EasyJet now expects full-year headline pretax profit of between £420 million and £430 million, said CEO Johan Lundgren, citing increased demand because of the disruption at British Airways and Ryanair.
It had previously forecast profit of between £400 million and £440 million.
"Challenging" Market Conditions
While Lundgren also pointed to more price points for seat selection and hold luggage, as well as measures to make its fleet more resilient to operational disruptions, he said market conditions remain "challenging".
The company added that full-year headline costs would increase by about 12%, partly due to higher fuel prices.
Bernstein analysts said that they hope for more detail from next month's full-year earnings call on whether the boost from strikes at BA and Ryanair was obscuring underlying trends.
Travel group Thomas Cook collapsed last month, with the company unable to service its debts and convince banks to back a rescue plan in the face of changing customer habits and intense competition from fast-growing airlines such as easyJet and Ryanair.
EasyJet's capacity growth in 2020 is expected to be at the lower end of its historic range, the airline said this week.
"The market was hoping for a more robust commentary, with a mention to positive pricing trends, with this needed to deliver reasonable profit growth this year given the less attractive fuel hedging it has in place compared to last year's rates," broker Goodbody said in a note. "Overall, we see today’s release as disappointing."