easyJet share price drops as airline predicts higher H1 loss

on Jan 23, 2014
Updated: Oct 21, 2019

iNVEZZ.com, Thursday, January 23: Shares in (LON:EZJ) dropped more than three percent at the open today after Britain’s biggest budget airline posted a slowdown in revenue growth in the first quarter and predicted a higher first half loss than last year due to the effect of Easter falling in its fiscal second half this year.

easyJet’s share price fell 3.4 percent to 1,683p as at 8:18 UTC compared to a 0.07 percent increase in the blue chip FTSE 100 index.
**First quarter results**
easyJet’s revenue rose 7.7 percent year-on-year to £897 million in the three months to the end of December, as the number of passengers carried by Europe’s second biggest budget airline grew 4.2 percent to 14.3 million. Seats flown rose 4.1 percent to 16.1 million and revenue per seat grew, as expected, by 3.4 percent to £55.71 (up 1.4 percent at constant currency). The results were affected by tough year-on-year comparisons due to strong post-Olympics demand in the UK and a challenging competitive environment.

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In the fiscal 2012/13, easyJet’s revenue rose 10.5 percent y/y, following an 11.6 percent increase in the prior year, while revenue per seat growth accelerated to 7.0 percent from 5.9 percent.
Cost per seat excluding fuel rose 3.0 percent (up 1.2 percent on a constant currency basis) due to higher charges at regulated airports and higher maintenance costs associated with the planned ageing of the fleet and an increased proportion of leased aircraft.

Commenting on the results, easyJet CEO Carolyn McCall said: “The performance in the quarter demonstrates our continued focus on cost, progress against our strategic priorities and easyJet’s structural advantage in the European short-haul market against both the legacy and low-cost competition.”

easyJet forecast a pre-tax loss for the first half in the range of £70 million to £90 million, which is higher than the £61 million pre-tax loss for the first half of last year. With first half bookings in line with last year, the airline expects first half revenue per seat at constant currency to be very slightly up year-on-year after adjusting for a 1.5 percentage point adverse impact from the timing of Easter. Last year Easter fell on 31 March, resulting in £25 million additional revenue in the first half, while this year Easter falls in April, in the second half of the company’s financial year. The company said it has sold about 15 percent of second half seats so far.

Cost per seat (at constant currency and excluding fuel) is expected to increase by around 1.5 percent for the first half of the year and by 1.5 percent to 2.0 percent for the full year. This compares to a forecast from November, for a 2.0 percent increase in both the first half and the full year.
The carrier reaffirmed its expectations for 3.5 percent capacity growth planned for the first half and 5.0 percent capacity growth for the full year.
**As of 8:22 UTC buy easyJet shares at 1,691.00p.**
**As of 8:22 UTC sell easyJet shares at 1,688.00p.**
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