easyJet share price: Group revenue drops in third quarter

on Jul 21, 2016
Updated: Oct 21, 2019
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easyJet (LON:EZJ) has updated investors on its third-quarter performance this morning, posting a drop in revenues. The update follows the airline’s profit warning last month.

**Highlights from easyJet’s statement:**
Passengers carried increased by 5.8% to 20.2 million, driven by an increase in capacity of 5.5% to 21.9 million seats and load factor increasing by 0.3 percentage points to 92.0%.
· Total revenue per seat decreased by 8.3% at constant currency or by 7.7% on a reported basis to £54.54 per seat. Total revenue in the quarter decreased by 2.6% to £1,196 million, as increased seat capacity was offset by the impact on yield of overall market capacity and cancellations as a result of significant external events.

· Commercial and operational performance during the quarter was impacted by the Brussels attack and Egyptair tragedy, significant disruption due to air traffic control strikes and congestion, runway closures at Gatwick airport and severe weather leading to 1,221 cancellations.
· Ongoing enhancements to our customer proposition and other revenue initiatives helped to stimulate bookings, partly compensating for the impact of disruption and other external factors.
· Strong cost control as cost per seat including fuel improved by 3.8% at constant currency, due to low fuel prices and strong underlying cost focus. easyJet’s cost per seat excluding fuel at constant currency was broadly flat during the quarter. This was despite £20 million of disruption cost during the quarter.
· Advantaged balance sheet. Cash and money market deposits were £1,120 million and net cash was £368 million as at 30 June 2016.
Commenting; Carolyn McCall, easyJet Chief Executive said:
“The economic and operating environment has been difficult in the third quarter due to a number of factors including air traffic control strikes and other industrial action, runway closures at London Gatwick and severe weather. These factors combined with industry capacity growth in short haul continue to have an impact on industry yields at a peak time of year. More recently currency volatility as a result of the UK’s referendum decision to leave the EU as well as the recent events in Turkey and Nice continue to impact consumer confidence.
Despite this, easyJet carried more passengers and achieved higher load factors during the third quarter as easyJet’s brand continued to resonate strongly across Europe. easyJet is strongly controlling costs and driving continued improvement in operational and customer delivery. We are focussed on the opportunities that are inevitable from a tougher environment.
The easyJet business model remains robust, with a strong cash position, solid balance sheet and a flexible fleet plan. The easyJet team is confident in its ability to navigate the period ahead and drive long term advantage.”
Outlook
The economic and operating environment remains uncertain, following the high levels of disruption and more recently the UK’s referendum decision to leave the EU, as well as the recent events in Turkey and Nice, which have affected consumer confidence. This combined with industry capacity growth in short haul continues to have an impact on industry yields at a peak time of year.
Approximately 65% of expected bookings for the fourth quarter have now been secured, with booked average revenue per seat for the quarter declining by around 7.5% at constant currency. As a result of events in the last week the revenue per seat trajectory in the fourth quarter remains uncertain. Capacity is expected to grow in the fourth quarter by 6%.
Costs continue to be well managed. Cost per seat excluding fuel at constant currency is expected to decrease by 1% for the full year (subject to normal levels of disruption).
easyJet is strongly controlling costs and driving continued improvement in operational and customer delivery. It is focussed on the opportunities that are inevitable from a tougher environment.
With a strong balance sheet and significant flexibility the whole easyJet team feel confident of their ability to drive long term advantage. Consequently, the Board remains committed to its proposal to increase its dividend pay-out ratio to 50% of post-tax income.
**More to follow…**
As of 07:09 BST, Thursday, 21 July, easyJet plc share price is 1,127.00p.