easyJet profits down 47%
18.11.08
easyJet’s operating profits for the year ended 30 September fell to £91 million, a drop of 47% compared to a year earlier. The fall is largely caused by a sharp increase in fuel costs but also because of higher maintenance costs for its fleet.
Revenue for the year jumped by 31.5% to £2.4 billion, boosted by ancillary revenues from Speedy Boarding, baggage charges and charges for on-board items. Passenger numbers were up by 17.3% to 43.7 million (including the affect of the GB Airways purchase part way through the year) while load factor improved by 0.4 percentage points to 84.1%. The airline says that almost half of its passengers now come from outside the UK.
Andy Harrison, easyJet chief executive said: ‘easyJet delivered a good trading performance in the financial year ending September 2008. Our winter bookings for the first quarter of 2009 are slightly ahead of last year, which is partly a reflection of the reduction in competitive capacity on our routes and partly our own decision to restrict our growth in seats flown. There is also evidence of a ‘flight to value’ for both business and leisure passengers.'
‘We recognise that economic conditions will be very difficult and easyJet is planning accordingly, which means focusing on offering customers great value, driving down controllable costs and preserving cash. Unlike many of our competitors, our Airbus contract provides us with a flexible approach to fleet growth, which we intend to make full use of in such uncertain economic conditions.’
The airline says the economic outlook remains ‘very difficult and highly uncertain’. In order to limit margin dilution over the winter from the impact of higher fuel costs, it has withdrawn certain lower yielding flights although winter capacity will remain broadly flat at the same time that competitor capacity on easyJet routes has fallen by 7%. It has also reduced its aircraft utilisation for this winter from 11.6 hours to an average of nine hours a day.
The airline added: ‘The impact of higher fuel costs will be felt most sharply in the first half of 2009 and thus pre-tax margins will decline in the first half compared to the prior year.’ For summer, easyjet said yields will depend on the extent of the fall in consumer expenditure in Europe and the level of competitor capacity reduction in the market. It said: ‘We expect to see further downsizing and consolidation of many weak competitors.'
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