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Ash and snow to dent EasyJet full year profits

Saturday, 11 May, 2010 0

Disruption caused by the Icelandic volcanic ash cloud is expected to cost EasyJet up to £75 million.

The carrier was forced to cancel 6,512 flights, disrupting 850,000 passengers.

The budget airline repatriated approximately 200,000 stranded passengers within five days.

The ash cost estimate came as the budget carrier revealed a reduction of underlying half year winter losses to £78.7 million from a loss of almost £130 million a year earlier.

EasyJet also suffered from “exceptional” snowfall conditions in December and January but managed to fly 90% of its programme.

“Nonetheless the impact of this disruption on our customers and people was significant,” the airline said.

EasyJet incurred £21 million of additional costs due to the snow disruption. The pre-tax result, including lost contribution, in the first half of the year was adversely impacted by £25 million.

Total revenue per seat in the six months ending March 31 grew by 5.1%, driven by good consumer demand, ancillary revenue growth and a 1.4% increase in sector length,the airline said

The estimated full year pre-tax profit would have been in the range of £175 million to £200 million at current exchange rates and fuel price, prior to the recent volcanic ash related disruption, the carrier said.

“This disruption has caused additional cost and lost contribution estimated at between £50 million and £75 million. Therefore, the company has revised its profit expectations for the year to a range of £100 million to £150 million at current exchange rates and fuel price.”

EasyJet is continuing to focus efforts on the business travel market through new routes to business destinations, improved frequency and increasing the proportion of flights at peak times of the day.

It claimed to have increased its share of corporate travel airline sales by almost 25% in the past 12 months and grown its market share from 3.3% in 2008 to 4.2% in 2009.

Ancillary revenues grew by £1.10 per seat in the first half of the year to £10.23.

These revenues, excluding a checked bag charge, grew by 13.2% to £5.96 per seat.

In-flight revenue grew 12% in the period reflecting the successful roll out of local food offerings and electronic point of sale.

Chief executive Andy Harrison said: “EasyJet will deliver substantial profit growth in 2010 through the worst recession in 70 years and even after absorbing snow and volcanic ash related disruption costs from the worst snowfall in 30 years and an unprecedented five day closure of much of European airspace.

“We expect to grow our passenger numbers by around 10% and increase both yield and load factor.

“This is a remarkable performance based on strong European-wide consumer demand for our low cost network of primary routes which offers the lowest prices to the most convenient airports.”

Passenger numbers grew by 10.6% to 21.5 million in the half year with 54% of passengers now originating outside the UK, an increase of four percentage points compared to the prior period.

The airline said it had increased its market share from 6.5% to 7.6% of short haul aviation over the past 12 months

Guardian Media Group chief Carolyn McCall will join as chief executive on July 1 to succeed Harrison.

Chris Kennedy joins over the summer as group finance director.

by Phil Davies

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Ash and snow to dent EasyJet full year profits

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Phil Davies

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