On the morning just before the Labour party introduced its much leaked Election manifesto, entitled 'For the Many, you could be forgiven for reading it's hard to read type (white reversed out of red...) as FOR THE MONEY ! But as a prelude EasyJet chose to release its Interim (first half)results .....far more engaging as its BREXIT centric...
Equally looking at the horror story dressed up as the EasyJet first half interim accounts, the airline flew a record number of passengers in the first six months of its financial year, and also set up a European operational base to secure its post-Brexit future.
All this has consequences, and EasyJet are now reporting a much bigger loss as revenue per seat fell, and 'per seat' costs overall rose. Julian Bray Aviation expert and Broadcaster will be discussing the numbers on BBC3Counties Radio later today Tuesday at 17 :10 hrs. and later on the BBC I-Player.
The airline in releasing its interim results earlier today, reported a loss before tax of £212m for the six months to 31 March, the number much higher than industry forecasts of pre-tax loses in the region of £176m, higher than the £21m last year, due to Easter not falling within the first half, and impacting by a minus £45m, leading to a negative net currency implosion of £82m. The so called headline loss per share was 43.8p.
EasyJet passenger numbers up 9percent to 33.8m; total revenue increased by 3.2percent to £1.8bn, - revenue per seat dropped 4.9percent to £48.8 mainly driven by 8.4percent increase in capacity - but the airline (along with competitors) having to contend with greatly increased disruption, with some 3,300 EasyJet flights either cancelled, delayed, over three hours or diverted.
But it the picture is not all gloom and doom, as this was offset by non-seat revenue up by 18percent, due to an expanding inflight catering and drinks range offer, overall airline markets improved, a load factor increase of 0.5 percentage points to 90.2percent.
However, the brexit and currency exchange effect, a negative impact of £175m on Easyjet numbers.
The decline of UK Pound Sterling drove the cost per seat upwards by 4.9percent to £54.45. Lower fuel prices did however help to mitigate this loss. driven by a gross foreign exchange impact of £175m, and as we suggested partially offset by a lower at delivery fuel price.
EasyJet expects to get its Air Operator Certificate (AOC) in another EU member state later this summer, which will secure the pre Brexit position namely flying rights of the 30percent of the network that remains wholly within and between EU states, excluding the UK.
This one-off cost, the bulk being aircraft registration costs, is expected to reach £10m, over three years with up to £3m incurred in the 2017 financial year. The cost in the first half of 2017 has been £1m.
EasyJet Chief executive Carolyn McCall said it was a "resilient performance during the winter months",
put down to strong cost control, improved operational performance and forward bookings ahead of 2016 at 77percent for the third quarter and 55percent for the half year, "showing that demand to fly remains strong and reflects growing evidence that consumers are prioritising expenditure on flights and holidays above other non-essential items."
"EasyJet is delivering on its strategy of purposeful investment in securing and building strong positions at Europe's leading airports which is driving competitive advantage with sustainable returns. As a result our expectations for the full year are in line with current consensus market expectations."
Shares in EasyJet early trading were off 5 percent, and expected to recover.
Noting the European operational shift tied up in the AOC plans, Laith Khalaf an analyst at Hargreaves Lansdown, noted that the vote to leave the EU and the associated fall in sterling have not been good for the airline's share price, which is currently languishing some 20percent below where its stood before the referendum. Equally these traumatic trading conditions and an impending General Election, apply to others in the same sector, as forward bookings have been hit.
"EasyJet clearly thinks bigger is more beautiful, as it seeks to further increase capacity in an already crowded marketplace. The strategy is to bolster its position on key routes, allowing it to drive better deals with airports and suppliers. Indeed the airline has upgraded an order with Airbus to provide even bigger planes, which will allow EasyJet to fly more people into airports with limited landing slots.
"EasyJet is doing what it can to strengthen its position in tough times, in the hope than when the clouds part, it will be flying higher than its rivals."
Sources: PA, Hargreaves Lansdown, BBC, AP
JULIAN BRAY +44(0)1733 345581, Journalist & Broadcaster, Aviation Security & Airline Operations Analyst/expert, www.freelancedirectory.org?name=Julian.Bray.aviation.comment Travel / Maritime & Cruise Industry, NUJ, EQUITY, LIVE ISDN LINK, Broadcast ISDN COOBE ++44 (0)1733 345020 e&oe Old faithful NOKIA: 07944 217476 www.aviationcomment.com