EasyJet Sales Gain on Added Routes as Competitors Trim Seats

EasyJet Plc, Europe’s second-largest discount carrier, said sales gained in the three months through December as competitors trimmed capacity and the airline added flights to Switzerland and France.

Revenue jumped 9.2 percent to 833 million pounds ($1.32 billion) in the fiscal first quarter, the company said in a statement. The airline said its first-half 2013 pretax loss will be 50 million pounds to 75 million pounds. Deutsche Bank AG has estimated a loss by that measure of 109 million pounds. The stock rose as much as 5.7 percent to a record.

Chief Executive Officer Carolyn McCall has boosted frequencies on key routes while using allocated seating, flexible tickets and corporate agents to grab a bigger slice of the business market. EasyJet lured 10 million corporate travelers in 2012 and will begin flying between Moscow and London, as well as from Milan to Rome’s Fiumicino airport, this year. Sales per available seat rose 8 percent to 53.87 pounds.

EasyJet got an “impressive” amount of revenue per seat, Neil Glynn and Hugo Turner, analysts at Credit Suisse, wrote in a note to investors today. “Trading momentum has remained strong into winter.”

The stock closed 5.1 percent higher at 898.5 pence in London, having touched the highest level since the Luton, England-based company’s initial public offering in 2000. EasyJet shares have more than doubled in the past 12 months.

Expansion Dispute

The carrier said it’s targeting “prudent” capacity increases of 3 percent to 5 percent as it develops a proposal to present to shareholders on aircraft deliveries after 2017 and fleet management between 2015 and 2017.

Founder Stelios Haji-Ioannou cut his holding earlier this week for the first time since 2004 and threatened to sell more shares if EasyJet pursues an aircraft order. The entrepreneur, whose family controls almost 37 percent of the stock, said he wants management to target a 10 percent profit margin and boost dividend payouts to 50 percent, up from one-third.

“While we support fleet upgrades, our concern lies in uncertainty over pricing and the reaction of the major shareholder,” James Hollins, an analyst at Investec, said in a note to investors today. “A recent stock sale around this issue led to a share price dip and risk remains of further action.”

‘Under Way’

Talks and evaluation of aircraft are “well under way,” the company said, adding that EasyJet may exercise options to buy three A320s to ensure it has capacity for summer 2014. Newer, more fuel efficient aircraft will improve the airline’s cost advantage over competitors and help it retain better positions at airports, EasyJet said today.

The airline took delivery of two Airbus A320 planes and returned three to lessors during the quarter, giving it a total of 213 planes at the end of 2012. The average age was about 4.5 years.

EasyJet expanded capacity in Switzerland and France by 14 and 10 percent respectively during the quarter, while cutting flights to and from Spain. Competitors flying on the low-cost carrier’s routes trimmed capacity by 800,000 seats, EasyJet said. Destinations added this winter include Luxembourg and Turin, Italy.

The total passenger count increased 6.2 percent to 13.7 million, boosting EasyJet’s load factor, a measure of occupancy, to 88.6 percent. Some 80 percent of available seats have already been sold for the first half.

Disruption caused by weather or industrial action forced the cancellation of 64 flights in the last three months of 2012, compared with 236 a year earlier, the airline said. EasyJet canceled more than 200 flights, mainly in France and Switzerland, which cost the airline about 1.5 million pounds, last weekend. That figure isn’t included in the first-quarter results, Paul Moore, a spokesman, said by e-mail.

Larger rival Ryanair Holdings Plc will report third-quarter results on Jan. 28.