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EasyJet Says Earnings to Beat Estimates as Rivals Retrench

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July 24 (Bloomberg) -- EasyJet Plc boosted third-quarter sales almost 11 percent and said full-year earnings should beat analyst estimates as Europe’s second-largest discount airline adds customers on routes where network carriers are withdrawing.

EasyJet shares rose 8.5 percent after the U.K. company said revenue reached 1.14 billion pounds ($1.75 billion) in the three months through June and that 12-month pretax profit will be in a 450 million-pound to 480 million-pound range. Analysts had been expected earnings of 431 million pounds, based on 20 estimates.

The Luton, England-based carrier is ramping up efforts to draw corporate flyers with allocated seating, flexible tickets and higher frequencies on key routes, and began fast-tracking flexi-fare clients in May. Cuts at network airlines helped lure 10 million business travelers in 2012, and rivals pared capacity on overlapping routes by 500,000 seats in the quarter, it said.

EasyJet posted a “blow-out result” as it allocated seats to lucrative markets including Switzerland, Italy, French regional bases and Russia, and as poor weather buoyed travel from Britain to beach resorts, said Donal O’Neill, an analyst at Goodbody Stockbrokers in Dublin who rates the stock “buy” and plans to lift his profit forecast to the upper end of the new range.

Shares of EasyJet rose as much as 113 pence to 1,449 pence and were trading 7.9 percent higher at 1,441 pence as of 9:47 a.m. in London, taking the stock’s gains this year to 88 percent and valuing the company at 5.71 billion pounds.

Fare Gain

“EasyJet has delivered a strong performance in the third quarter in a benign capacity environment,” Chief Executive Officer Carolyn McCall said in the release, adding that almost three-quarters of the airline’s second-half seats are booked.

Revenue per seat, reflecting average fares plus income from ancillary charges, rose 6.1 percent to 61.44 pounds in the three months at constant currencies, EasyJet said in a statement.

The company added 400,000 passengers in the period and increased capacity 3.6 percent, with its load factor, a measure of seat occupancy, sliding to 88.2 percent from 89.1 percent a year earlier as Easter fell in the previous quarter.

McCall has sought to multiply frequencies on services attractive to business clients while adding new routes from London to Moscow and between Milan and Rome Fiumicino airport.

Luton, England-based EasyJet grew U.K. capacity by about 4 percent in the three months, as well as scaling up its Swiss and Italian operations by 13 percent and 7 percent respectively.

Plans to buy 135 Airbus SAS jets worth $13 billion at list prices for delivery from 2015 were backed by shareholders this month, even as founder Stelios Haji-Ioannou decried the deal as bad for investors.

Dublin-based Ryanair, Europe’s No. 1 low-cost carrier, will report first-quarter results July 29.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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