EasyJet lifts profit by simplifying upgrades for fliers

LONDON • EasyJet plc is making it easier for customers to hand over their money.

The UK budget carrier raised its 2018 profit guidance yesterday, in part because more passengers are paying extra for allocated seating and check-in bags. That’s been encouraged by a website overhaul that’s made it less difficult to book those options.

EasyJet shares advanced as much as 5.1%, the most in five months, after the Luton, England-based company said it now expects full-year pretax profit of between £550 million and £590 million (RM3.12 billion), up from a previous range of £530 to £580 million.

Extra fees from check-in bags and allocated seating helped ancillary revenues per seat rise 11.5% in the third quarter (3Q) through June.

EasyJet aims to break even on its Berlin Tegel operations in the 2019 fiscal year, CEO Johan Lundgren said in an earnings call. Headline losses at Tegel are expected to be about £125 million, more than previous guidance of up to £95 million.

“I’m still very convinced that there will not be any disruption of flying post-Brexit,” Lundgren, who joined EasyJet in December from tour operator TUI AG, said on the call.

The European Commission is promising to ensure continued connectivity even in the case of a so-called hard-Brexit, he added, while the carrier is continuing to shore up its European shareholder base to ensure that it can keep operating if ownership rules change.

Revenue rose 14% to £1.6 billion in the 3Q, boosted by higher fares amid what the carrier described as a “benign competitor environment”. Rivals took up fewer slots from defunct Monarch Airlines than EasyJet expected.

There are also “challenges for competitors in France”, where Air France is struggling with labour strife and looking for a new CEO.

The airline expects warm weather may slow travel demand as people holiday at home in the airline’s 4Q, though Lundgren said he doesn’t think the impact will be significant.

At the same time, walkouts by Ryanair Holdings plc pilots may bolster demand, though there’ll be no “opportunistic” price increases, he said.

EasyJet will file a complaint with the European Commission over the impact of air traffic control strikes, the CEO said. Disruption costs have been £25 million higher this quarter than a year ago because of the disruption and bad weather, with the carrier having to provide 70,000 hotel rooms for stranded customers.

No decision has yet been taken on whether to convert more of EasyJet’s Airbus SE A320 orders to bigger A321 jets, Lundgren told reporters on board the inaugural flight of the carrier’s first A321neo. — Bloomberg