easyJet delivers strong passenger and revenue growth, rigorous cost control and a resilient operational performance
Strengthening number one positions
· Record number of passengers for the first six months of the 2017 financial year at 33.8 million, up 9.0% year-on-year with a record first half load factor at 90.2% (H1 2016: 89.7%), reflecting easyJet’s attractive network and affordable fares.
· Capacity increased by 8.4% as easyJet delivered its strategy of purposeful investment to reinforce and expand its leadership positions in its core markets.
· Total revenue up 3.2% to £1,827 million with revenue per seat of £48.80 (a decline of 4.9%, and of 9.7% at constant currency1, in line with guidance) reflecting the timing of Easter and high overall market capacity growth.
Rigorous cost control
· Headline cost per seat excluding fuel at constant currency flat at £38.54, reflecting strong cost control despite high levels of disruption. Headline cost per seat increased by 4.9% to £54.45 (a decrease of 4.1% at constant currency) driven by the weakness of sterling.
· Headline loss before tax of £212 million includes the estimated impact of the move of Easter into the second half of the year (circa £45 million) and a negative net currency impact of £82 million. Excluding these two items the headline loss before tax would have been circa £85 million. Total loss before tax after non-headline items was £236 million.
Investing in the future
· easyJet has agreed to purchase 30 A321 NEO aircraft under its existing agreement with Airbus, with the first arriving in summer 2018. This is a conversion of 30 existing A320 NEO orders and via increased flexibility within the Airbus agreement will be neutral to current fleet capex commitments. The A321 NEOs will increase easyJet’s ability to grow in slot constrained airports and manage costs.
· easyJet remains on track to confirm possession of a European Air Operator Certificate (AOC) by the Summer and therefore secure its future operations within the European Union.
· easyJet’s business model and strategy are underpinned by sector leading balance sheet strength, with a net cash position at 31 March 2017 of £353m. Unencumbered aircraft now represent 71% of easyJet’s total fleet.
· easyJet continues to implement its strategy of purposeful, profitable growth to secure leading positions at primary airports and drive returns over the long term.
· Forward bookings are ahead of last year; at 77% for the third quarter and 55% for the half year.
· easyJet’s capacity growth in the second half of the 2017 financial year is planned to be at a similar level to the first six months and RPS in the third quarter is anticipated to decline by low single digits, a significant improvement from the first six months.
· Headline cost per seat excluding fuel at constant currency for the full year and at normal levels of disruption is expected to increase by around 1%, which better than initially expected. easyJet has successfully offset the cost of additional investment in resilience and in improving its long-term operational performance within this latest full year guidance.
Commenting on the results, Carolyn McCall, easyJet Chief Executive said:
“easyJet delivered a resilient performance during the winter months with strong cost control, improving operational performance and within guidance for revenue. We grew total revenue by 3.2% year on year while passenger numbers were up by 2.8 million. The first half loss is in line with market expectations and reflects the movement of Easter into the second half as well as currency effects which together had an estimated impact of circa £127m on the bottom line.
“Our bookings for the summer are ahead of last 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.
“Looking ahead, we are seeing an improving revenue per seat trend as well as the continued reduction of competitor capacity growth. Cost performance for the full year will continue to be strong. 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(2).”