EasyJet's shares flying high
Profits rise by more than £150m despite heatwave fears
Shares in easyJet soared to a record high as the budget airline said profits will smash City forecasts with a surge of up to 50%.
The Luton-based carrier defied concerns the recent heatwave will hit last-minute getaways by saying almost three-quarters of its summer seats are booked.
EasyJet said rising passenger numbers and strong third-quarter revenues will mean pre-tax profits of up to £480m for the year to the end of September – compared with £317m a year earlier. That propelled its shares 8% higher on the FTSE 100 Index.
Revenues for its third quarter to the end of June surged 10.5% to £1.14bn and passenger numbers increased 2.6% to 16.4m. Revenues per seat grew by 6.1% at constant currency to £61.44. Analysts at Numis Securities had expected annual profits of about £440m and third-quarter revenues of £1.12m.
EasyJet's shares stumbled on Tuesday after analysts at HSBC downgraded the carrier on worries the recent British heatwave would cut demand for impromptu foreign holidays, cutting its profit forecast to £433m.
"We think demand for holiday flights will be melting as fast the ice-creams on Clacton beach in the current heatwave," said HSBC.
Chief executive Carolyn McCall said 73% of its seats are now booked for its peak April to September period and annual profits will be between £450m and £480m unless it hits significant disruption.
She said: "EasyJet has delivered a strong performance in the third quarter in a benign capacity environment."
Shares in the airline touched a high of 1449p in early trading – the highest level since its stock market flotation in 2000. EasyJet's shares have continued climbing since its promotion to the FTSE 100 in March.
However, the airline's load factor – a measure of how full its planes are – dipped to 88.2% from 89.1% a year earlier after Easter fell a week earlier on March 31.
Higher airport charges and disruption from strikes and de-icing helped push costs 4.5% higher at constant currency.
The carrier was recently given the green light to modernise its fleet after shareholders backed plans to order up to 235 new aircraft – defying objections from founder Sir Stelios Haji-Ioannou.
EasyJet will upgrade and expand its fleet by acquiring 135 Airbus planes over the next nine years. There is also an option to buy a further 100 Airbus planes.
The purchase is expected to allow EasyJet to boost passenger numbers from the current level of 60m a year to around 90m.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said EasyJet's success story looks set to continue.
"Investor appetite for an aggressive player in a difficult market seems insatiable," he added.