EasyJet today reported “robust” demand fuelled by strikes at rivals British Airways and Ryanair.
The UK budget carrier expects annual profits to come in at the upper half of previous guidance while delivering a “solid performance” in the fourth quarter of its financial year.
Pre-tax profits of between £420 million-£430 million are now projected for 2019 despite a “difficult disruption environment” in the three months to the end of September.
Annual passenger numbers are expected to rise by 8.6% to 96 million driven by a 10.3% increase in capacity to 105 million seats. However, the load factor for the full year will decline by 1.4 percentage points to 91.5%.
Total costs for the full year will increase by about 12% due to increased capacity, higher unit fuel costs and adverse foreign exchange movements, the airline reported in a trading update today. The increase was partially offset by improvements in cost per seat excluding fuel.
“Despite a difficult disruption environment experienced in the fourth quarter, which included the impact of storms across Europe and the technical issues experienced at Gatwick airport, the operational resilience initiative was a key driving force behind the strong performance,” easyJet said.
The carrier’s total fuel cost for the year is expected to be around £1.42 billion, including an adverse impact of foreign exchange and increased Emissions Trading System costs.
Foreign exchange will have a adverse impact of around £14 million year-on-year.
Forward bookings for the first quarter of 2020 are in line with the same time last year, with expected capacity growth for next year “at the lower end”, including a 2% increase in the first three months.
EasyJet plans to provide further details on its “2020 priorities” as part of its 2019 full year results on November 19.
Chief executive Johan Lundgren said: “EasyJet has continued to perform in line with expectations, despite challenging market conditions.
“As a result of our self-help initiatives and the increased demand due to disruption at British Airways and Ryanair, we anticipate achieving headline profit before tax for the full year 2019 of between £420 million and £430 million, in the upper half of our previous guidance range.
“Our implementation of initiatives in the fourth quarter to optimise yield has led to solid revenue performance with total revenue per seat at constant currency set to increase for the full year.
“We have continued to invest in operational resilience, with the programme successfully reducing the impact of disruption on our operations. As a result, we expect to report a fall in headline cost per seat for the year, excluding fuel at constant currency.”
Meanwhile, Lundgren denied that the package holiday is dead in the wake of the Thomas Cook collapse but suggested the industry needs to change.
Writing in the Daily Telegraph, he said: “My vision is that the travel industry can leverage technology to reinvent itself to provide a fresh offer to customers that is truly innovative and sustainable.
“EasyJet Holidays will be far from a legacy tour operator but I do hope that when we launch, we can welcome into our team some great people from Thomas Cook and they can help us to create what a modern holiday will look like in future.”
Responding to the update, Steve Miley, a senior market analyst at analyst comparison site AskTraders said: “It’s been a turbulent time in the aviation industry of late yet easyJet managed to deliver a solid Q4 with robust customer demand.
“The collapse of Thomas Cook coupled with disruptions at Ryanair and strikes at British Airways will have all played into the budget airline’s hand this quarter.
“However, easyJet can’t count on the misfortunes of sector peers to lift its performance going forward.
“EasyJet confirmed full year profit before tax of £420 million-£430 million, however the stock is down 3% in early trade.”