EasyJet increases profit hopes

EasyJet increases profit hopes

Low-cost airline easyJet has lifted profit expectations for its traditionally weaker first half but warned it could be buffeted by volatile exchange rates and oil prices in coming months.

The group said it expected its pre-tax result for the six months to March 31 somewhere between a loss of £5m and profit of £10m.

It offered a glimmer of hope that its performance over the winter period would be in the black. The airline had previously forecast a first half loss of between £10m and £30m. A year ago it posted a £53m loss for the same period.

The airline said the impact of exchange rate movements would boost its bottom line by £20m for the half but result in a £40 million hit in the second half.

Meanwhile it hiked its expectation for revenue per seat growth in the first half but said costs would grow more than previously thought “due to higher levels of de-icing and disruption costs in the second quarter”.

Chief executive Carolyn McCall said the airline “has performed well in the first half of the year and has continued to deliver its strategy of making travel easy and affordable for passengers”.

“We continue to expect that lower fuel costs will be beneficial for our customers as fares adjust,” she added.

But the airline warned that “further volatility around currency rates and the oil price is likely to continue into the second half”.

This volatility was highlighted when military action in the Middle East today saw the price of a barrel of Brent crude surge close to 60 US dollars, sending easyJet’s shares 5% lower.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said easyJet “continues to be a compelling proposition for both customers and investors alike, with an improved profit guidance figure providing some solace in the currently volatile environment”.

He added: “Less positively, concerns on the investment case tend to be sector wide rather than stock specific, such as heightening geopolitical concerns, volatile oil price and currency impacts, increased regulatory overhang and airport charges, although there was a slight uptick in cost per seat.”

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