Soaring easyJet shares help lift the London market
The FTSE 100 Index closed up 21.88 points at 7,411.34.
EasyJet carried the London market higher on Tuesday as investors cheered the budget airline’s brighter outlook despite a dive in annual profits.
The FTSE 100 Index closed up 21.88 points at 7,411.34, with the no-frills carrier jetting to the top of the biggest risers after capitalising on the woes of industry rivals.
Shares rose more than 5%, or 65p to 1,343p, after it mustered up a record performance in the final three months following a shambolic showing from rival Ryanair, which has had to cancel hundreds of flights after miscalculating pilot leave.
The group also said trading so far in its new financial year has been “encouraging” thanks to last month’s collapse of Luton-based carrier Monarch, as well as the demise of Air Berlin and Alitalia’s administration.
Forward bookings are higher than a year earlier, at 88% for the first quarter and 26% up for the second quarter, while it now expects revenue per seat to grow by “low to mid-single digits” in the first half.
It came as the Brexit-hit pound took its toll, with annual headline pre-tax profits dropping 17% to £408 million, down from £494 million the previous year.
David Madden, mark analyst at CMC Markets UK, said: “EasyJet shares are up after the airline produced a good set of results in an environment which has seen come of its rivals exit the market.
“Full-year revenue rose by 8.1%, and it saw a 9.7% rise in the number of passengers to 80.2 million – a record higher.
“If you strip out the adverse currency movement, the company saw annual pre-tax profits rise by 3%.”
Across Europe, Germany’s Dax was ahead by 0.8% and the Cac 40 in France was up 0.5%.
On the currency markets, the pound was down against the US dollar and the euro, as traders looked ahead to Wednesday’s Budget and digested the latest update on the UK public finances.
The Office for National Statistics (ONS) said public sector net borrowing, stripping out state-owned banks, jumped by £500 million to £8 billion last month.
The move was above economists’ predictions of £7.5 billion, as interest payments hit a record high of £6 billion in October due to higher inflation since the Brexit vote.
Sterling was marginally lower versus the US dollar at 1.323 and down against the euro at 1.126, with a bright update from Britain’s manufacturing industry helping support the UK currency.
The Confederation of British Industry (CBI) industrial trends survey saw total orders in the three months to November hit the highest rate since August 1988, with chemicals and food industries enjoying a strong period.
In oil, Brent crude climbed 0.6% to 62.36 US dollars a barrel, with traders eyeing next week’s Opec meeting, which could pave the way for production cuts to be stretched beyond the end of March 2018.
Focusing on UK stocks, Babcock International was the biggest faller on the top-flight as investors weighed a potential hit to the defence sector if the Government makes further defence spending cuts.
Shares dropped more than 6%, or 51p to 703.5p.
In a contrast of fortunes, B&Q-owner Kingfisher rose 4.1p to 308.5p after the retailer said it was on track to hit full-year profit targets.
The group notched up a 3% rise in total sales to £3 billion for the third quarter, helped by a 16.6% jump in Screwfix revenues, which drove a 2.5% increase in sales across its UK & Ireland division.
The biggest risers on the FTSE 100 Index were easyJet up 65p to 1,343p, NMC Health up 117p to 2,847p, Imperial Brands up 103p to 3,130p, BHP Billiton up 24.5p to 1,385p
The biggest fallers were Babcock International down 51p to 703.5p, Mediclinic International down 31p to 507.5p, Intertek Group down 230p to 5,175p, Johnson Matthey down 112p to 3,158p.