Saturday, 18 May 2019

Budget carrier easyJet reports a loss of £275 million

Photo easyJet
The budget carrier easyJet has posted a loss of £275 million in the six months to the end of 2019, while passenger numbers increased by 4.9 million to a total of 41.6 million.

The airline's latest results indicate that its total revenue increased by 7.3% to £2,343 million due to capacity growth and a foreign exchange benefit negatively offset by, the impact of the move of Easter, the new IFRS 15 accounting standard. It was also helped by Monarch's bankruptcy and Ryanair cancelling a large proportion of its winter 2017/8 schedule in the UK. Total revenue per seat decreased by 6.3% to £50.71. 

The airline also faced a number of challenges that lead to the losses, including fuel price increases, the impact of foreign exchange, underlying cost inflation, investing in resilience as well as the impact of drones at Gatwick in December. 


The airline says it may be affected by the ongoing negative impact of Brexit-related market uncertainty as well as a wider macroeconomic slowdown in Europe. It is estimated that at current exchange rates and with jet fuel remaining within a $600 metric tonne to $700 metric tonne trading range, easyJet's unit fuel bill for the 12 months to 30 September 2019 is likely to increase by between £25 million and £60 million compared to the 12 months to 30 September 2018. easyJet's total fuel cost for the year to 30 September 2019 is currently estimated to be approximately £1.4 billion.  In addition, exchange rate movements are likely to have around a £10 million positive impact on headline profit before tax compared to the 12 months to 30 September 2018.

The airlines chief executive, Johan Lundgren, defended the rapid hiking of the firm's fares to Madrid from the UK for the Champions League final between Tottenham and Liverpool on 1st June. 

Many football fans had taken to social media and radio phone-ins to complain fares had gone up from under £200 to over £1,000. Lundgren said the price was higher than average because there had been an "enormous" surge in demand. "That is actually how the system works," he said. "The whole pricing picture is very dynamic," adding that at peak booking times, the airline could fill a plane in six seconds. "That's how quickly this goes and this is how the system reacts."



  
H1 2019
H1 2018
     Change
Favourable/(adverse)
Capacity (millions of seats)
46.2
40.4
14.5
%
Load factor (%)
90.1
91.1
(1.0)
ppts
Passengers (millions)
41.6
36.8
13.3
%
Total revenue (£ million)
2,343
2,183
7.3
%
Headline loss before tax (£ million)
(275)
(18)
£(257)
m
Total loss before tax (£ million)
(272)
(68)
£(204)
m
Headline basic loss per share (pence)
(56.1)
(3.3)
(52.8)
pence
Revenue per seat (£)
50.71
54.10
(6.3)
%
Constant currency revenue per seat (£)
50.12
54.10
(7.4)
%
Total headline cost per seat (£)
56.66
54.53
(3.9)
%
Headline constant currency cost per seat excluding fuel (£)
43.65
43.11
(1.3)
%



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