EasyJet shares rise 4.5% on winter season sales boost

EasyJet said its loss over the winter low season will shrink as the collapse of tour operator Thomas Cook pushes more customers its way.

The stock rose 4.5%, after EasyJet said the shortfall for the six months through March is likely to be smaller than last year’s £275m (€322m) loss. Robust demand and lower capacity levels at competitors have bolstered fares, the airline said.

The collapse of UK travel giant Thomas Cook, last September, accounted for almost a fifth of the 8.8% gain in revenue-per-seat in the December quarter, chief executive, Johan Lundgren, said. The former TUI manager founded a new EasyJet Holidays division in November.

EasyJet follows Ryanair in issuing positive guidance, after a difficult year forced a clutch of operators into bankruptcy, with Thomas Cook the highest-profile casualty. The grounding of Boeing’s 737 Max will limit Ryanair’s expansion this summer, meaning EasyJet is well-placed to pick up extra demand, according to broker Sanford C. Bernstein.

“Capacity growth looks moderate for this environment,” said analyst Alex Irving. “With Thomas Cook, the Max and the rest, why not go faster?” Mr Lundgren is currently targeting a 3% seating increase over the year.

While revenue is rising, so are costs. Peter Bellew’s arrival as chief operating officer, from Ryanair, could serve as a catalyst for progress, according to Mr Irving and his colleague, Daniel Roeska.

EasyJet founder, Stelios Haji-Ioannou, owner of a 34% stake, said that while he supports the airline’s capacity restraint, he plans to make a “token vote” against the re-election of chairman, John Barton, at this year’s annual general meeting, to communicate his desire for a stronger focus on earnings growth.

He said he wants the company to set a target of 200 pence in earnings-per-share by 2021. Analysts tracked by Bloomberg forecast 113 pence.

Mr Lundgren said that three-quarters of seats in the first-half of the financial year have been booked, just over one percentage point ahead of the same time last year.

First-quarter sales advanced 9.9%, to £1.43bn, as the passenger tally rose 2.8%.

Bloomberg