EasyJet Cuts Its Losses and Sends Its Stock Soaring

Skift Take

EasyJet is continuing a string of quarters that lifts it above rival Ryanair and helps build its reputation as a low-cost carrier that’s as smart as it is cheap.

— Jason Clampet

EasyJet has upgraded its first-half results forecast by 25%, sending its shares close to an all-time high on the back of tight cost control and the popularity of its allocated seating programme.

The Luton-based airline said it expected to post a pretax loss of between £55m and £65m for the six months to March 31, an improvement on previous guidance for a loss of up to £90m.

The group, which, like its rivals, traditionally makes a loss over the winter, when fewer customers fly, reported a loss of £61m for the same period in 2012-13. The upgrade was also helped by benign weather, which has meant fewer weather-related disruptions, easyJet said.

EasyJet has over the last year stolen a march on bigger budget rival Ryanair by introducing measures such as allocated seating and allowing passengers to change their flights in a bid to appeal to business travellers.

Shares in easyJet, up more than 60% over the last 12 months, closed up 3.7% at 1,692p, putting them near their all-time high, reached earlier in March, of 1,760p.

Analysts said that although the company had not commented on prospects for the full year, there were likely to be upgrades to consensus forecasts. EasyJet chief executive, Carolyn McCall, said the upgrade showed the firm’s “structural advantage” against not only rival low-cost carriers, such as Ryanair, but also legacy carriers.

Those former state-owned entities, such as Germany’s Lufthansa, are battling against low-cost carriers to maintain market share in Europe’s short-haul sector. “I think what’s encouraging is that the improvement is on the revenue and the cost side,” Panmure Gordon analyst Gert Zonneveld said.

Revenue per seat in the six-month period is expected to rise 1.5%, easyJet said, higher than a forecast given in January of “very slightly up”, on a boost from allocated seating and other initiatives. The forecast improvement to easyJet’s first-half performance comes despite a hit of up to £8m in additional unit fuel costs for the first half compared with the same period in 2012-2013.

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