easyJet Plc (LON:EZJ) expects to deliver a first half performance in line with the guidance given in the Q1 2019 trading statement on 22nd January 2019, with an expected first half headline loss before tax of around £275 million.
Revenue
Total first half revenue is expected to grow by circa 7.3% to circa £2,340 million with seat capacity increasing by circa 14.5% to circa 46.2 million as easyJet continues to strengthen its position in key markets as well as completing the annualisation of its flying at Berlin Tegel airport.
Revenue per seat at constant currency is expected to have declined by circa 7.4%, in line with previous guidance of a mid to high single digit decline for the half. Underlying revenue is expected to be positive, offset by the impact of IFRS 15, the move of Easter into the second half as well as the dilutive impact of flying at Berlin Tegel and the prior year impacts from the Monarch administration and Ryanair cancellations.
Cost
Total headline cost in the first half is expected to increase by circa 18.8% due to increased capacity, higher fuel unit costs and a modest increase in cost per seat excluding fuel.
Headline cost per seat excluding fuel at constant currency is expected to increase by circa 1.4% for the half, in line with expectations. This reflects investment in resilience in advance of the busy summer period and in particular higher ownership and crew costs.
Fuel and FX
It is expected that easyJet’s unit fuel bill for the six months to 31 March 2019 will be around £37 million adverse, while headline foreign exchange will have an adverse impact of around £8 million.
Brexit
easyJet has continued to make good progress in its European ownership requirements (excluding UK shareholders) and has now reached 49.92%.
The EU Parliament has passed its air connectivity legislation, which together with the UK’s confirmation that it will reciprocate plus our well planned and executed operational initiatives mean that whatever happens, easyJet will be flying as usual.
Outlook
Whilst easyJet will deliver H1 results in line with expectations, macroeconomic uncertainty and many unanswered questions surrounding Brexit are together driving weaker customer demand in the market, such that we are seeing increasing softness in ticket yields in the UK and across Europe. Given this uncertainty our outlook for H2 is now more cautious.
Despite this, H2 revenue per seat at constant currency is expected to be slightly up, which reflects weakening Q3 underlying demand and an expected year on year uptick in Q4 driven by a programme of yield initiatives and an assumption of a more certain Brexit outlook.
There is no change to guidance for Full Year headline cost per seat excluding fuel at constant currency, which is still expected to be circa flat (assuming no abnormal levels of disruption).
Fuel and Foreign exchange guidance will be updated at our half year results announcement.
easyJet will provide further details on its performance in the six months to 31 March 2019 and forward looking guidance at its half year results on 17 May 2019.
Commenting; Johan Lundgren, easyJet Chief Executive said:
“easyJet has performed in line with expectations in the first half. We have flown around 42 million customers with a significantly reduced number of cancellations and continued high levels of customer satisfaction.
“We are operationally well prepared for Brexit. Now that the EU Parliament has passed its air connectivity legislation and together with the UK’s confirmation that it will reciprocate, means that whatever happens, we’ll be flying as usual. I am pleased that we have also made progress on our European ownership position which is now above 49%.
“For the second half we are seeing softness in both the UK and Europe, which we believe comes from macroeconomic uncertainty and many unanswered questions surrounding Brexit which are together driving weaker customer demand. We are rolling out further initiatives to support our trading and are making significant progress in our Operational Resilience Programme, which is designed to make the easyJet flying experience better for our customers over the summer.
“As a highly profitable airline with one of the strongest balance sheets in aviation easyJet is well positioned to seamlessly connect Europe with the warmest welcome in the sky.”
