May 9 (Bloomberg) -- EasyJet Plc, Europe’s second-biggest discount airline, advanced to the highest price in two years after saying a gain in business bookings helped narrow the first-half loss.
The pretax loss in the six months through March 31 was 112 million pounds ($181 million) versus a loss of 153 million pounds a year earlier, Luton, England-based EasyJet said today. The average estimate of seven analysts was for a loss of 114 million pounds.
Chief Executive Officer Carolyn McCall has dropped the carrier’s no-frills approach in favor of a model that allows passengers to pay for extras such as priority boarding and flexible tickets. The company is also testing allocated seating and has increased frequencies between key cities as it seeks to grab a bigger share of the corporate travel market.
“Their value proposition looks very strong and there is no reason why they should not be able to strengthen their market position,” said Gert Zonneveld, a Panmure Gordon analyst in London who recommends buying the stock.
EasyJet rose 3.6 percent to 527.5 pence, the highest since April 27, 2010, and the third-largest gain today in the FTSE 350 Index. The stock has climbed 34 percent this year, making it the best performer in the seven-member Bloomberg EMEA Airlines Index.
First-half revenue increased 16 percent to 1.47 billion pounds as the number of passengers carried grew by 5.4 percent to 25.2 million. EasyJet’s fuel costs rose 26 percent to 483 million pounds in the period as the price of oil climbed. The carrier, which pays for fuel in dollars, estimates that current exchange rates and fuel prices will add 145 million pounds to its costs in the second half of its financial year.
McCall said the London Olympics, starting in July, were unlikely to boost revenue because the carrier’s planes will already be flying full during the peak summer months. If anything, the games may prove disruptive, McCall said, as an influx of visitors traveling to the U.K has the potential to increase congestion in the country’s airspace.
“We believe it will be revenue neutral because it’s in our busiest single time,” McCall said in an interview with Bloomberg Television. “But it could be operationally more difficult for us, and all airlines in the U.K.”
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