Budget airline easyJet PLC (LON:EZJ) said it expects better revenue per seat for the first half of the year after it got off to a “strong start”, with costs in line with expectations.
Aided by the collapse of Thomas Cook in September and “robust” customer demand, the FTSE 100 group increased total group revenue 9.9% to £1.4bn in the quarter ending 31 December.
The company said it now expects to deliver a first-half headline loss before tax in 2020 better than seen in the same period last year.
Passenger numbers were up 2.8% to 22.2mln as capacity rose 1% to 24.3mln seats and aeroplanes were 91.3% full, up 1.6 percentage points.
This meant airline revenue per seat increased 8.8% at constant currency in the quarter ending 31 December, which was 4% ahead of consensus analyst estimates, with guidance for a "mid to high single digit" growth for the year.
Fuel and other costs
Costs excluding fuel at constant currency increased by 4.3% in the quarter reflecting lower capacity growth, higher ground handling costs and 813 cancellations from French strikes in December. Cost per seat was up 4.7%, which analysts noted was at the higher end of guidance for the year.
The total fuel bill for the year is expected to be roughly £1.64bn, including around £25mln invested in carbon offsetting and a unit fuel bill expected to be between £110mln and £170mln.
Chief executive Johan Lundgren said: “I'm pleased that we have made a strong start to the year with continued positive momentum.
“The improvement in our revenue per seat has been driven by our self-help revenue initiatives combined with robust customer demand and a lower capacity growth market.”
He said the new Holidays business had been “launched successfully” in December and was expected to break even this year.
Shares near 18 months highs
EasyJet shares flew 5% higher to 1,521.32p in morning trading on Tuesday, their highest since August 2018.
Noting that cost per seat was at the top end of guidance for the year, Morgan Stanley said the upgrading of guidance for revenues per seat from previous guidance of low to mid single digits, and maintenance of cost per seat for the year at low to mid single digit growth should all in all "translate into an upgrade of earnings expectations".
Russ Mould at AJ Bell said that the exit of Thomas Cook, the grounding of the Boeing 737 Max aircraft and retreat from the short-haul market by Norwegian Airlines has led to a reduction in industry capacity.
“In turn this has helped to ease some of the competitive pressures in what still remains a pretty cut-throat market,” he said.
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