EasyJet Raises Full-Year Earnings Guidance • Pilots’ Strike at Air France Allowed It to Win More Passengers

The Wall Street Journal
By Ed Ballard
Oct. 3, 2014 5:23 a.m. ET


LONDON—Budget airline EasyJet PLC on Friday increased its earnings guidance for the year as it said a pilots’ strike at French carrier Air France allowed it to win more passengers.

For the year ended Sept. 30, EasyJet said it expects to post a pretax profit of between 575 million pounds and £580 million ($928 million to $936 million). It had forecast a pretax profit of between £545 million and £570 million on July 24.

Revenue per seat for the second half is expected to grow by around 2% adjusted for currency movements, helped by strong late-summer trading. Shares were up around 7.6% at 0915 GMT, making EasyJet the strongest gainer on the FTSE 100 index.

Sales were boosted by £5 million as passengers switched from Air France, which canceled more than half its flights for two weeks in September. The Air France-KLM SA unit lost €20 million ($25 million) a day as pilots confronted management over plans to expand the airline’s Transavia budget carrier. Germany’s Deutsche Lufthansa AG has also been hit by industrial action as traditional airlines come under threat from budget rivals such as EasyJet.

Currency movements boosted EasyJet’s results by around £15 million compared with a year earlier, while it spent £2 million less on fuel. It carried 6.14 million passengers in September, up 7.5% from 5.71 million a year earlier. The load factor—a measure of how efficiently planes were filled—rose to 92.2% from 89.7%.

EasyJet’s shares have more than trebled in the past two years but are down 21% from highs above 1,850 pence touched in April as investors have questioned whether growth will slow. Relative to the company’s expected earnings, the shares are trading near the bottom of a 10-year range, analysts at Panmure Gordon wrote Friday before markets opened.

Analysts at Jefferies called the company’s investment case “a conundrum,” noting that cost-savings are balancing out comparatively slow growth in revenue per seat. A special dividend is an outside possibility for the final results, which are due to be announced in November, the brokerage wrote.

Last month, EasyJet said it would increase its dividend payout more than 20% and buy 27 new Airbus Group NV jets before 2018, reflecting continued strength in Europe’s budget airlines. September also saw Ireland’s Ryanair Holdings PLC raise its full-year guidance for passenger numbers, saying profit would come in toward the top end of expectations.

- Source:  http://online.wsj.com