Focus on business market pays off for easyJet

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The Independent Online

EasyJet shares soared yesterday after the budget airline unveiled a surprise surge in revenues and predicted annual profits ahead of forecasts.

Revenues rose 23 per cent to £935m in the third-quarter of easyJet's financial year as the company's plan to attract business flyers paid off. Its predicted pre-tax profits would be between £200m and £230m – well ahead of analysts' consensus of about £180m. The no-frills carrier was forced to bring forward its trading statement from next Wednesday because its quarterly figures were so far ahead of consensus forecasts.

Carolyn McCall, easyJet's chief executive, said the results vindicated her moves to focus on flights from major European cities to attract business customers. She said 75 per cent of summer seats were already booked but warned that easyJet still faced high fuel prices and a rocky economy.

EasyJet shares rose 55.3p, or 18 per cent, to 368p.

Ms McCall took over in March last year at easyJet, which was her first job leading a public company. Some analysts questioned whether she had the industry knowledge to lead a budget airline in turbulent times after heading Guardian Media Group. She had a bumpy first few months and the recent performance marks a turnaround from January, when easyJet warned rising fuel costs, bad weather and air traffic control strikes would increase first-half losses.

Peter Hyde, an analyst at Liberum Capital, said the strong revenues could be used as an argument for more capacity but could also be used to boost the dividend. EasyJet said it would stick to its current dividend policy but that it would review its balance sheet at the end of the year.

Business bookings increased by a fifth in the third quarter after the group started marketing actively to companies for the first time. As a result, the amount of income it makes on each seat rose 5.2 per cent to £56.02. There was also a sharp improvement in punctuality, with 81 per cent of flights on time, compared with 57 per cent a year earlier.

The airline's founder and major shareholderSir Stelios Haji-Iaonnou resumed his battle with the board this week, calling for less spending on expansion and new planes and higher payouts for investors.