EasyJet PLC (LON:EZJ) said full-year profits should land towards the better end of the budget airline’s previous guidance after it enjoyed increased demand due to disruption at rivals Ryanair and British Airways.
With costs rising 12% on last year, annual profit before tax is expected to touch down between £420mln and £430mln.
This will represent a 25%-27% decline from the £578mln PBT in 2018 but will be in the upper half of management’s earlier £400mln-£440mln targets and is above the £417mln latest analyst consensus.
Passenger numbers for the year to end-September were up 8.6% to 96mln as capacity was raised 10.3% to 105mln seats, meaning planes were not as full as they were the year before.
Costs and self-help initiatives
The cost increase was due to higher unit fuel prices and adverse foreign exchange movements, but was partly offset by a 0.8% fall in other costs from “self-help initiatives”.
Looking to the first quarter of next year, the FTSE 250 company said forward bookings were in line with the same time last year.
Chief executive Johan Lundgren said various initiatives in the fourth quarter to optimise yield led to the “solid” revenue performance, with second-half revenue per seat expected to increase roughly 0.8% at constant currency, better than his previous guidance of “slightly down”.
“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.”
Analysts at UBS said the update was “reassuring but likely not enough”, predicting profit taking would hit the shares.
The Swiss bank’s number crunchers said the absence of an update on the 2020 outlook was expected and a further update would be forthcoming on 19 November when the full-year results arrive.
EasyJet shares, having risen more than 30% from mid-August’s near two-year lows ahead of the update, fell further as Tuesday’s session wore on, declining more than 7% to 1,081.5p by mid-afternoon.
— Adds broker comment and share price —