Member Article

Circumstances align as easyJet reports £7m winter period pretax profit

Budget airline easyJet has reported a half-year pretax profit of £7m, an increase of £60m from a loss of £53m last year.

The sharp increase will have no doubt delighted the Luton-based carrier with the company often making a loss during the winter period, doing most of its business during the summer months.

easyJet now boasts a profit of £0.21 per seat, as opposed to last year’s loss of £1.70 per seat.

However, the rise in company profit includes a £35m favourable unit fuel bill and the benefit of a temporary gain of £18m from foreign exchange movements.

Total revenue grew by 3.8% to £1,767m, with revenue per seat increasing by 0.2% to £54.91 and by 2.6% at constant currency.

Cost per seat excluding fuel decreased by 1.4% to £38.66, but increased by 2.9% at constant currency.

Key drivers included inflationary increases of regulated airport charges, an increase in crew establishment costs and higher levels of de-icing and disruption costs in the second quarter. The cost does not include a possible additional navigation charge from Eurocontrol which easyJet is disputing.

Fuel cost per seat decreased by 7.3% to £16.04 and by 6.3% at constant currency, which has been driven by the significant reduction in market price.

Corporate tax has been charged at an effective rate of 20.4% (2014: credited at 21.6%) based on rates enacted as at 31 March 2015, resulting in a tax charge of £2m.

Commenting on the results, Carolyn McCall, easyJet Chief Executive said: “easyJet has delivered a record performance in the first half of the year by continuing to deliver its strategy of making travel easy and affordable for passengers.

“The profit in the half reflects the delivery of our customer focused revenue initiatives and a strong finish to the ski season as well as the benefit we received from the lower fuel price and favourable foreign exchange movements.

“As we enter the important summer season, forward bookings are in line with last year and as we predicted passengers are benefitting as fares fall to reflect a more competitive operating environment and lower fuel costs.

“easyJet continues to be well positioned to grow revenue and profit this year, delivering sustainable returns to shareholders due to its compelling network, low cost base and strong balance sheet.”

Recently, easyJet cancelled its service between Newcastle and Gatwick following insufficient passenger demand.

However, a spokesperson said: “We continue to serve the North East with 16 other exciting destinations across Europe, from Malta to Geneva to Rhodes.”