EasyJet to pare costs after Paris shootings

EasyJet is stepping up efforts to control costs this year to offset potential disruptions like the Paris shootings and presumed bombing of a Russian passenger jet in Egypt in late 2015.
EasyJet to pare costs after Paris shootings

Europe’s second-largest low-cost airline now forecasts expenses per seat excluding fuel will be flat to up 1% in the year through September, EasyJet said in a statement yesterday.

That compares with a November prediction of an increase of 2%.

EasyJet cut fares to attract customers after the French and Egyptian terrorist attacks.

Keeping expenses in check is central to the business strategy of discount carriers such as EasyJet and larger rival Ryanair Holdings.

Those efforts have been helped by a drop in oil prices, which are currently at about a 12-year low.

“This year we will consolidate” a low-fare strategy “with a relentless focus on cost reduction which is already delivering” results, EasyJet chief executive Carolyn McCall said in the statement.

“This will ensure that EasyJet continues to win and continues to grow revenue, profit and dividends,” she said.

Pre-tax profit in fiscal 2016 will about match the £738 million (€973.7m) that analysts are predicting, EasyJet said, citing estimates the carrier has gathered.

That would be a gain of 7.6% from a year earlier.

Revenue in the three months ended Dec. 31 declined 0.1% to £930m, missing the £946m average of estimates compiled by Bloomberg, because of falling fares and currency shifts.

“While the French and Egyptian issues have had a more damaging impact on fares than we had expected, these are relatively exceptional and short-term issues, while the more controllable and longer-term issue of cost efficiencies is better than we had envisaged,” James Hollins, an analyst at Nomura, said in a report to clients.

EasyJet shares fell 1.7% at one stage yesterday.

The stock has dropped 7.8% this year.

Including spending on fuel, the fiscal first-quarter cost per seat fell 6.2%.

Excluding currency effects and fuel expenses, the figure increased 1.3%.

Spending growth was held back by airport fee discounts for higher passenger volume, savings in engineering and maintenance, and a fleet shift to more-efficient Airbus A320 airliners from A319 models, EasyJet said.

Meanwhile, rival Ryanair is due to issue it earnings for its fiscal third quarter on Monday.

Attention will also fall on whether Ryanair had any shortfall in passenger numbers because of the Paris shootings and the security alert across other western European cities.

Ryanair is seeking nonetheless to build on an impressive growth in passengers it carried last year.

— Bloomberg and Irish Examiner

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