Budget airline easyJet (EZJ) hailed the success of its new allocated-seating strategy and courtship of business-class passengers after beating forecasts for the first six months of its financial year. The low-cost carrier flew a record 12 million business passengers over the year to 31 March. That helped push revenue per seat up 3 per cent to £54.80 for the half, limiting overall losses to £53m - better than mid-point guidance of £60m.
Chief executive Carolyn McCall said more customers were being won from legacy carriers. The company's UK market share now stands at 20 per cent, making it the largest short-haul airline in Britain.
That's partly the result of aggressive capacity expansion. In the UK, easyJet flew 5 per cent more seats during the period, and will grow further as a result of a seven-year deal with Gatwick. Having bought landing slots from Flybe, the group plans to increase capacity at the Sussex airport by 10 per cent over the coming year. One reason it favours Gatwick is the regulatory environment, which improved following a decision by the Civil Aviation Authority (CAA) to continue the current framework.
easyJet's half-year results coincide with final proposals from Heathrow and Gatwick for runway expansion. Gatwick claims a second runway would enable it to host a further 10 million passengers a year, and it also believes it caters better for low-cost airlines. easyJet refused to be drawn on the potential plans, but claimed European governments were likely to support legacy carriers over budget competitors.
Speculation is building over the possibility of another special dividend. In the first six months, easyJet returned £308m to shareholders, of which £175m related to a special payout of 44.1p a share. But analysts believe the company has scope to hand back a further £500m or so over the next three years.
Brokerage Numis chose not to upgrade its 2014 forecasts and still expects pre-tax profits of £585m, giving EPS of 118p, up from £478m and 100p in 2013.
EASYJET (EZJ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,652p | MARKET VALUE: | £6.56bn | |
| TOUCH: | 1,650-1,653p | 12-MONTH HIGH: | 1,853p | LOW: 1,094p |
| DIVIDEND YIELD: | 2% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 419p* | NET CASH: | £449m | |
| Half-year to 31 March | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 1.60 | -61 | -12.0 | nil |
| 2014 | 1.70 | -53 | -10.4 | nil |
| % change | +6 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £477m, or 120p per share | ||||
