easyJet looks to post US$965m – US$1.03bn full-year profit

Despite a 5.4% Q3 fall in revenue per seat to £59.08 (US$91.95) easyJet is looking to post a full year profit of between £620million – £660million (US$965million – US$1.03billion). The results have exceeded expectations given in May’s guidance. The airline was beset with problems during Q3 with the Fiumicino fire which caused 773 cancellations, and the French air traffic controller strikes which added an additional 591 cancellations. In total, these two incidents led to 1,364 of 1,463 flight cancellations in the quarter, over double the number of 648 experienced during Q3 2014.
According to easyJet, “April’s disruption adversely impacted pre-tax profit by £25million and was largely driven by the French ATC strike. The strike was particularly disruptive for easyJet due to its extended nature, easyJet’s strong presence on French domestic routes and because around two-thirds of easyJet’s network flies through French airspace which is more than other carriers.”
However these effects were reduced in impact through revenue management initiatives, as well as strong UK and leisure demand. The easyJet lean program also produced £7million (US$10.85million) of sustainable savings in Q3, increasing year-to-date savings to £28million (US$43.40million), this came mainly from airport and ground handling initiatives. “EasyJet remains confident of delivering sustainable savings for the full year at the top end of the £30million to £40million range,” the company said.
During Q3 the airline also added 4.7% more seats in key markets including Amsterdam, Basel, Geneva, Hamburg and Porto, subsequently increasing passenger numbers by 6.2% or 19.1 million. The result saw the average load factor increased by 1.3 points to 91.7%, though total revenue still dropped 1.0% to £1.2 billion (US$1.86 billion).
easyJet CEO Carolyn McCall said that “With 77% of second half seats now booked, easyJet expects to grow profit before tax from £581 million for the year to 30 September 2014 to a range of £620 million to £660 million for the year to 30 September 2015.”
Moving forward, easyJet’s fuel hedging to the end of this financial year stands at 88% based on a price of US$922/metric ton, and hedged at 80% at an average $844/metric ton for the financial year ending September 2016. The airline anticipates reducing its fuel bill by £100-£115million compared with the year to Sept. 2014, though a £35 million exchange rate hit is also expected.