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EASYJET - 6mths Ending 31 Mar 18

easyJet plc

Results for the six months ending 31 March 2018

easyJet delivers a strong first half performance and one of its best winters ever;
unveils focus areas of investment to drive returns and profit per seat

Strong first half performance

· The strength of easyJet's network and customer proposition helped to deliver strong performance in the first six months of the financial year. This was supported by:

§ A positive trading environment and higher load factors across easyJet routes

§ Capacity reductions by other airlines in easyJet markets

§ The partial movement of Easter into the first half from the second half in 2017

· Passenger numbers for the six months to 31 March 2018 increased by 3.0 million to 36.8 million, including 0.7 million from easyJet's new Berlin Tegel operations launched in January

· Capacity increased by 7.8% as easyJet grew its existing network by 4.6% and added an additional 1.2 million seats at Tegel. Load factor grew by 0.9 percentage points to 91.1% (91.9% excluding Tegel)

· Total revenue increased by 19.5% to £2,183 million (H1 2017: £1,827 million). Total revenue per seat increased by 10.9% to £54.10 (H1 2017: £48.80), with an increase of 8.3% at constant currency(1). Ex-Tegel flying revenue per seat increased by 12% to £54.64 and by 9.5% at constant currency, at the upper end of previous guidance

· easyJet's business model and strategy are underpinned by sector leading balance sheet strength, with a net cash position at 31 March 2018 of £665m (31 March 2017: £353m)

· Headline cost per seat excluding fuel increased by 2.2% to £43.11 (H1 2017: £42.18), and increased by 1.6% at constant currency (1.3% excluding Tegel), due to increased loads, inflationary costs and the impact of severe weather, offset by £66 million of cost savings

· Headline profit before tax excluding Tegel was £8 million, a £220 million improvement on H1 2017 (H1 2017 loss £212m). Total headline loss before tax was £18 million, an improvement of £194 million. Total loss before tax of £68 million for the six months ended 31 March 2018 (H1 2017 loss £236m) principally reflecting non-headline costs associated with the one-off integration of Tegel operations and the sale and leaseback of ten A319 aircraft

Investing in the future

· Following an update of its strategy, easyJet plans to invest in enhancing its propositions in holidays, business passengers, customer loyalty and data. This leverages easyJet's existing strong business model, network, brand, cost base and data leadership

· This, combined with easyJet's rigorous approach to underlying cost control and plans to address increasing disruption cost, is expected to drive significant profit per seat improvement

· As a result of its disciplined capital allocation and focus on maximising shareholder returns easyJet is also targeting to deliver increasing return on capital employed with a close focus on cash

Outlook

· easyJet continues to implement its strategy of profitable growth to secure leading positions at primary airports and drive returns over the long term

· Forward bookings are ahead of last year: at 80% for the third quarter and 57% for the second half

· easyJet's ex-Tegel capacity growth in the second half is forecast at circa 5% and revenue per seat at constant currency growth in the second half is expected to be slightly positive, reflecting more disciplined market capacity growth offsetting the negative impact of the partial movement of Easter into the first half

· Full year headline cost per seat excluding fuel at constant currency (assuming normal levels of disruption in H2) is expected to increase by c.2%. This includes the impact of severe disruption incurred in the first half and expected employee incentive payments due to our strong profit and operational improvement

· At Tegel we now expect to deliver a combined headline and non-headline impact that is within the £160 million previously guided. Headline loss before tax is expected to increase to between £75 million and £95 million, due to a higher fuel price, additional regulated security and noise tax charges and lower gauge wet lease aircraft than planned, as well as the potential risk of lower revenue from our finalised schedule. One-off non-headline costs are now expected to be significantly better than previously guided at around £60 million due primarily to savings in aircraft lease costs and better execution of crew and fleet transition

· easyJet currently expects headline profit before tax for the financial year to 30 September 2018, including the impact of the Headline loss from Tegel, to be in the range of £530 million to £580 million

· Capital expenditure for the financial year to 30 September 2018, including the investment in Tegel, is expected to remain in line with previous guidance at £1.2bn


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COMMENTS

CITYAM: Easyjet narrows losses as first-half revenue soars by 20 per cent to hit £2bn
http://www.cityam.com/285790/easyjet-narrows-losses-first-half-revenue-soars-20-per-cent

REUTERS: EasyJet sees profits soaring after rivals falter
https://www.reuters.com/article/us-easyjet-results/easyjet-sees-profits-soaring-after-rivals-falter-idUSKCN1IG16W

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