easyJet reports £10 million cost impact of the drones at Gatwick

easyJet has delivered a good performance in the quarter with robust customer demand driving passenger and ancillary revenue which is in line with expectations. Underlying revenue per seat was positive, including good ancillary revenue growth. This was offset, as expected, by the impact from last year’s one-off revenue benefits, the dilutive impact of flying at Tegel and new accounting standards delaying the recognition of revenue.

easyJet has made good progress with its cost and operational performance but both were affected by the impact of drone activity at London Gatwick over the Christmas period.

Total revenue in the first quarter to 31 December 2018 increased by 13.7% to £1,296 million. Passenger revenue increased by 12.2% to £1,025 million and ancillary revenue increased by 19.9% to £271 million.

Passenger numbers in the quarter increased by 15.1% to 21.6 million, driven by an increase in capacity of 18.2% to 24.1 million seats which was slightly lower than originally planned due in part to the drone issues at London Gatwick and to late A321 deliveries from Airbus.

Load factor decreased by two percentage points to 89.7%, as anticipated, due to the one-off increase in prior year late demand and the dilutive impact of Tegel flying.

Total revenue per seat decreased by 4.2% at constant currency, in line with expectations.

easyJet’s underlying cost performance has been solid and in line with expectations, before the cost impact of the drones at Gatwick. Headline cost per seat excluding fuel at constant currency increased by 1.0% in the quarter reflecting:

–          A £10 million cost impact of the drones at Gatwick relating to customer welfare costs (representing c.1ppt of cost per seat in Q1). The incident affected around 82,000 customers and led to over 400 flights being cancelled

–          Annualisation of crew pay deals; better than expected crew retention; and some additional inefficiency relating to Gatwick disruption

–          Ownership costs reflecting new aircraft year on year, some additional leasing costs resulting from late Airbus aircraft deliveries and the impact of IFRS 16 accounting