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EasyJet raises profit guidance amid positive summer trading

EasyJet today raised its annual profit guidance to between £550 million-£590 million as the budget airline remains on course for a positive summer trading period.

This is up from previous guidance of £530 million to £580 million including a full year headline pre-tax loss of around £125 million from new operations at Berlin Tegel airport.

The projection from chief executive Johan Lundgren came on the back of a strong performance in the three months to June 30 despite air traffic control strikes and bad weather.

In a trading statement this morning, the airline reported “robust customer demand” driving over performance in passenger and ancillary revenue growth.

However, easyJet warned: “Disruption across Europe continues to be an industry-wide issue and is having an impact on revenue, cost and operational performance, with the main drivers being European industrial action and air traffic restrictions.

“Despite this increase in disruption easyJet has increased its headline profit before tax guidance for financial year 2018 to between £550 million and £590 million.”

EasyJet was forced to cancel 2,606 flights in the period against 314 in the same period in 2017, of which the “significant majority” were due to industrial action.

“Operational performance for the quarter has been significantly impacted by external factors, in particular the regular and sustained ATC industrial action in France as well as the impact of severe weather,” the airline said.

Total revenue in the airline’s third quarter to June 30 increased by 14.0% to £1.6 billion and ancillary revenue increased by 21.1% to £328 million.

Passenger carryings rose by 9.3% to 24.4 million, driven by a 8.9% hike in capacity to 26.2 million seats – lower than originally planned due to disruption.

The load factor increased by 0.3 percentage points to 93.4%.

The performance was helped by a “benign competitor environment, with unfilled Monarch capacity and challenges for competitors in France”.

EasyJet added: “Current data shows that uptake by competitors of overlapping Monarch capacity continues to be lower than expected into Q4, however, some impact on late yields may be expected from continued warm weather.”

The airline achieved an 11.5% rise in ancillary revenue per seat at constant currency with greater conversion from improved website functionality in the quarter.

“More customers are choosing allocated seating and adding bags, helped by attractive pricing and product positioning with the 15kg/23kg split offer,” easyJet said.

This was offset by a £40 million negative impact of Easter moving partially into the first half of the airline’s financial year.

Lundgren said: “EasyJet has delivered a strong performance during our third quarter driven by robust customer demand.

“The airline continues to go from strength to strength attracting more than 24 million customers in the period who chose to fly with us for our leading network of top European destinations, low fares and outstanding service.

“We have also seen the continued growth in ancillary revenues, mainly due to more passengers choosing to buy allocated seating and hold bags.

“With easyJet on track for a positive summer trading period during the fourth quarter, we are raising our guidance for full year headline profit before tax for financial year 2018 to between £550 million and £590 million.”

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