EasyJet (easyJet.com) (UK) (London-Luton) reversed its financial fortunes and produced a six-month profit (before taxies) (ending on March 31) of £7 million ($7.8 million). This compares favorably with a loss of £53 million ($59.6 million) in the same period a year ago.
The airline issued these additional details:
Drive demand, conversion and yields across Europe
• Total revenue per seat increased by 2.6% year-on-year on a constant currency basis, and by 0.2% per seat on a reported basis, to £54.91 driven, in part, by the disciplined allocation of capacity, improvement in load factor, strong October trading, timing of Easter and performance of allocated seating.
• Average load factors increased by 0.7 percentage points to 89.7% whilst capacity grew by 3.6% to 32.2 million seats.
Maintain cost advantage
• Cost per seat excluding fuel grew by 2.9% on a constant currency basis and decreased by 1.4% on a reported basis to £38.66. The increase in cost per seat was driven by anticipated increases in charges at regulated airports mainly in Germany and Italy, increased disruption costs in the second quarter and costs associated with building a resilient operation ahead of new crew base openings.
• easyJet lean delivered £21 million of sustainable savings in the six months to March 31, 2015.
• From May 2016 all future deliveries of A320 aircraft to have 186 seats; existing A320 180 seat fleet to be retrofitted starting in winter 2016. 186 seat A320 expected to deliver a cost per seat saving of 2% vs. a 180 seat A320.
• Component support contract signed with AJW Group to drive savings in maintenance costs from October 2015.
Build strong number 1 and 2 network positions
• easyJet opened new bases in Amsterdam and Porto bringing the total number of bases to 26.
Disciplined use of capital
•In the six months to March 31, 2015, easyJet returned £180 million or 45.4 pence per share to shareholders through the payment of an ordinary dividend at an increased payout ratio of 40% of profit after tax for the year ended September 30, 2014.
• easyJet ended the first half of the financial year with cash and money market deposits of £976 million, a decrease of £93 million against last year. Net cash as at 31 March 2015 was £416 million compared to £449 million at March 31, 2014.
Commenting on the results, Carolyn McCall, easyJet Chief Executive said:
“easyJet has delivered a record performance in the first half of the year by continuing to deliver its strategy of making travel easy and affordable for passengers. The profit in the half reflects the delivery of our customer focused revenue initiatives and a strong finish to the ski season as well as the benefit we received from the lower fuel price and favourable foreign exchange movements.
As we enter the important summer season forward bookings are in line with last year and as we predicted passengers are benefitting as fares fall to reflect a more competitive operating environment and lower fuel costs. easyJet continues to be well positioned to grow revenue and profit this year, delivering sustainable returns to shareholders due to its compelling network, low cost base and strong balance sheet.”
Analysis of the results and a comment from Ken Odeluga, a senior market analyst at www.cityindex.co.uk
EasyJet has swung to a net profit at the typically weak half-way stage of the airline financial year and I think this can only emphasise that its making solid progress against its only true rival, at the moment, Ryanair.
It has edged the bar slightly higher against RYA with a 7 basis point extension of its lead on load factor to 89.7% vs. RYA latterly on 88% (Dec.). EZJ has now having maintained an average passenger yield advantage for almost every interim period since 2012.
Naturally, landing in the black for the first half bodes especially well for the rest of EZJ’s financial year, although despite the airline saying the outlook is broadly in line for the rest of the year, it will not have the advantage of fuel prices quite as low as they were in the prior period, therefore there’s scope for full-year forecasts to be scaled back—though only moderately in my view.
However as the market opened this morning it decided to look past these strengths and focus on the disruption EZJ warned of a few days ago from French air traffic control industrial action.
I do believe that the airline has been suitably, but perhaps overly cautious on the magnitude of impact these will have on the third quarter, though of course further qualification may come in the call (0930BST)
Copyright Photo below: Antony J. Best/AirlinersGallery.com. Airbus A319-111 G-EZDA (msn 3413) prepares to land at London (Gatwick) painted in the new 2015 livery.
EasyJet aircraft slide show: