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The collapse of several of its rivals has boosted growth at FTSE 100 airline easyJet, which said it expects one of its key performance metrics to return to growth thanks to a decline in competition.
EasyJet, Europe’s second-largest budget airline, said it had enjoyed an “encouraging” start to its new financial year, “primarily as a result of some capacity leaving the market”. It now expects revenue per seat to grow by “low to mid-single digits” in the first half, reflecting “a degree of short-term benefit as well as underlying improvement”.
The prediction came as the company confirmed a better than previously expected set of full-year results. Total revenues for the year to September 30 increased 8.1 per cent, to £5bn. Revenue per seat slipped 0.4 per cent, but fuller planes helped to offset some of the impact of competition-driven pricing pressures.
“Headline” profit before tax, which excludes one-off costs such as the formation of a new Austria-based airline to secure the company’s intra-EU operations after Brexit, was £408m. That was a 17.3 per cent decline compared to the previous year, but was at the top end of the company’s earlier forecasts. EasyJet had previously signaled the improved profit outlook in a trading update last month.
Europe’s airlines have faced a number of headwinds in recent months, with intense competition and rising fuel prices forcing three companies – Air Berlin, Alitalia and Monarch – into administration in the past six months.
But easyJet has been looking to benefit from its rivals’ difficulties, purchasing 25 aircraft and taking over other assets including flight slots from Air Berlin, and expressing an interest in buying some of Alitalia’s assets.
Outgoing chief executive Carolyn McCall said the company now has “a huge amount of positive momentum”, adding:
Our planned approach of achieving number one or two positions at Europe’s leading airports, friendly and efficient customer service and a continuous focus on sustainable cost control has put easyJet at a strategic advantage during a period where there have been bankruptcies and some airlines have struggled operationally.
Ms McCall will leave easyJet to take the helm of ITV at the end of this year. She will be replace by former Tui executive Johan Lundgren, whose appointment was announced earlier this month.