Higher charges cut EasyJet losses

 

Low-cost airline easyJet said today that half-year losses would be smaller than expected as its revenues were boosted by higher baggage charges.

The Luton-based group, which operates more than 580 routes across 30 countries, said revenue growth per seat in the six months to March 31 will be better than expected at 10%, with around half the improvement driven by higher fees and charges.

EasyJet also received a boost from the unseasonably mild weather experienced in the period, which led to “unusually” low levels of cancelled flights, while an uplifting TV advertisement featuring music from Liverpudlian rockers The Wombats also helped.

The improved performance means the group now expects to report a pre-tax loss for the six months to March 31 of between £110 million and £120 million, compared with previous expectations of £140 million to £160 million and a £153 million loss last year.

The group, like many airlines, always reports a loss in the first half of its financial year.

Shares in easyJet opened 5% higher after today's update.

The group previously reported higher revenues for first three months of its financial year as as it raised its first-bag charge by 16.9% to £4.70 per seat. Total fees and charges increased by 26.7% to £5.88 per seat.

Meanwhile, the carrier said disruption and de-icing costs were £18 million lower than the same period last year, when the UK was hit by a prolonged period of severe weather conditions.

The group, which has a 200-strong fleet of aircraft, said total cost per seat for the whole year is expected to increase 2%, assuming no significant disruption arising from events such as airspace congestion during the Olympics.

The airline said it also benefited from the demise of rivals, with the likes of Spanish carrier Spanair and Hungary's Malev going bust in January.

Looking ahead, easyJet said around 30% of seats for the second half of the financial year were booked.

The group's expectations for financial performance in the latter half of the year are unchanged, as it expects a higher fuel bill.

EasyJet chief executive Carolyn McCall said: "We continue to expect the environment for airlines to remain difficult."

The airline's board last month won a battle with its founder, Sir Stelios Haji-Ioannou, after shareholders overwhelmingly backed its multimillion-pound pay plans.

Sir Stelios, who speaks for 37.4% of the company's shares, failed to convince enough investors to join him in voting against the company's remuneration report, as well as the re-election of four directors including chairman Sir Michael Rake.

Sir Stelios is currently working on his latest project, a new airline venture in west Africa to be called FastJet.

PA

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