EasyJet Earnings Saved by Easter Gain After Pinch From Pound
EasyJet Plc (EZJ), Europe’s second-largest discount airline, narrowed its first-half loss as icy weather in Western Europe spurred late bookings for the Easter holiday that offset the negative impact of a weaker pound.
The pretax loss for the six months ended March 31 was in the range of 60 million pounds to 65 million pounds ($91 million to $99 million), Luton, England-based EasyJet said today in a statement. The year-earlier loss was 112 million pounds.
EasyJet earnings are improving as Chief Executive Officer Carolyn McCall boosts frequencies on key routes while using allocated seats, flexible tickets and corporate agents to grab a bigger slice of business flying. The weaker pound had an adverse impact of as much as 35 million pounds in the half, with a 5 million-pound hit from fuel, and those factors may together have a negative effect of 15 million pounds in the second half.
“We continue to see the second half carrying a more competitive edge,” Damian Brewer, an analyst at RBC Capital Markets in London, said in a note to investors today. “Summer 2013 faces greater competitor capacity expansion at Gatwick, which we think may dampen achievable yield upside.”
EasyJet fell 6.4 percent to 1,027 pence in London, the most since March 5 last year. The stock has gained 34 percent so far in 2013, valuing the company at 4.07 billion pounds. Aviation shares declined globally on concern that bird-flu deaths in China will hurt demand for travel.
EasyJet flew 4.87 million people in March, 5.3 percent more than a year earlier, and began flights between Moscow and London as well as from Milan to Rome’s Fiumicino airport.
“First-half losses have been halved year-on-year through our disciplined approach to capacity deployment and a focus on cost management,” McCall said in the statement. “We have also benefited from rival airlines taking winter capacity out of the market, the earlier timing of Easter and poor weather across the U.K. and northern Europe which stimulated strong bookings.”
The carrier said it’s placing orders for three Airbus SAS A320 aircraft as it mulls options for a larger purchase. EasyJet has previously placed orders for 242 Airbus single-aisle airplanes, of which 210 had been delivered through the end of March, according to the Toulouse, France-based manufacturer.
The pound has declined 5.8 percent against the U.S. dollar this year, and is the second-worst performer after the Japanese yen in the Bloomberg Correlation-Weighted Currency Index.
EasyJet said it has 75 percent of its jet-fuel requirement hedged for the six months ending Sept. 30 at $985 a ton.
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