Easyjet share price dips despite profit on track to hit £430m
Easyjet today predicted it will hit upper profit guidance of up to £430m for its full year, despite rising costs.
The airline said profits would hit between £420m and £430m in profit before tax in a trading update today, just off its £440m upper range prediction.
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But it warned of a 12 per cent rise in costs owing to a volatile pound and higher fuel prices.
Passenger numbers rose 8.6 per cent to 96m year on year thanks to a 10 per cent jump in capacity.
But revenue per seat is set for a 2.7 per cent drop, the airline said, despite increased demand due to British Airways and Ryanair strikes, due to a forex hit of £14m.
Easyjet’s share price slipped 4.5 per cent to 1,120p on the update even as analysts called it the numbers “robust”.
“Our implementation of initiatives in the fourth quarter to optimise yield has led to solid revenue performance with total revenue per seat at constant currency set to increase for the full year,” Easyjet chief executive Johan Lundgren said.
“We have continued to invest in operational resilience, with the programme successfully reducing the impact of disruption on our operations. As a result, we expect to report a fall in headline cost per seat for the year, excluding fuel at constant currency.”
CMC Markets chief market analyst Michael Hewson pointed to the 91.5 per cent load factor as a signal that capacity is worrying investors after Easyjet’s relegation from the FTSE 100 in June.
“While this might improve by year end it is still evident that the industry still has too many seats at a time when consumers are opting to stay at home more and more,” he said.
“It would appear that given the improvement seen in the second half, due to the woes of its competitors, is raising expectations that the collapse of Thomas Cook, may help in terms of improving passenger numbers.”
Richard Hunter, head of markets at Interactive Investor, added: “Since the recent nadir of early June the shares have rallied by 37 per cent and indeed, should this glide path be maintained, there remains an outside chance of Easyjet regaining its FTSE 100 status at the next reshuffle in December.
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“As evidenced by the initial reaction to this update, however, that is certainly not a given since the company needs to display this continuous improvement against an increasingly challenging backdrop. The market consensus of the shares as a hold is indicative of mixed views on Easyjet’s prospects, which is likely to remain the case until there is some improved visibility on progress.”
More to follow.