Low-cost airline easyJet Plc (ESYJY.PK, EZJ.L) Wednesday reported a first-half pre-tax loss, but it narrowed sharply from the prior year, helped by over 9 percent growth in revenues. The airline expects improved returns and profitability in the fiscal year. The stock is gaining over 5 percent in early morning trade.
Loss before tax narrowed to 61 million pounds ($92.9 million) from the previous year's 112 million pounds.
The airline attributed the loss reduction to revenue initiatives and the focus on maintaining its cost advantage, along with competitor capacity reductions and the timing of Easter.
Loss for the period was 47 million pounds compared to a loss of 90 million pounds last year. Basic loss per share narrowed to 12.0 pence from 21.2 pence.
Total revenue increased 9.3 percent to 1.601 billion pounds from 1.465 billion pounds, driven by an increase in load factor and improved ticket prices. The increase was 12.2 percent excluding currency impact.
Total revenue per seat increased 5.8 percent per seat to 53.39 pounds, while average load factors increased 1.7 percentage points to 88.6 percent. Capacity grew 3.3 percent to 30 million seats.
easyJet said the early Easter moved around 25 million pounds of revenue from April into March and increased first-half revenue per seat by around 1.5 percent. This is expected to reduce second half revenue per seat growth by around 1 percent.
Cost per seat excluding fuel grew 3.1 percent to 38.89 pounds. According to the company, cost increases were largely driven by increased charges at regulated airports and from higher weather related disruption and de-icing costs.
easyJet lean, a program designed to ensure that unit cost growth excluding fuel is kept below inflation, delivered an incremental 25 million pounds of savings in the period.
easyJet said around 50 percent of second-half seats have been booked and that trading in the second half continues to be in line with management's expectations.
The early Easter in 2013 is expected to reduce revenue per seat growth in the second half by one percentage point. Consequently, revenue per seat growth at constant currency for the six month period to September 30 is expected to be around 4 percent.
Looking ahead, easyJet CEO Carolyn McCall said, ''Whilst there is always the potential for unexpected events to impact short term financial performance, the outlook for the second half of the financial year combined with the strong reduction in first half losses means that easyJet expects to deliver improved returns and profitability for the year ending 30 September 2013."
Further, the company said it is in the final stages of the commercial evaluation of the next generation of short-haul engine technology. If an order is found to be required, the airline will bring a proposal to shareholders that will cover the next generation of deliveries that are likely to be after 2017, and a plan for the bridging period from 2015 to 2017.
EZJ.L is gaining 5.2 percent in early morning trade at 1,189.00 pence.
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