Bloomberg News

EasyJet Jumps Most in 8 Years as Business Flyers Lift Profit

July 22, 2011

(Updates with closing share price from first paragraph.)

July 22 (Bloomberg) -- EasyJet Plc jumped the most in eight years in London trading after Europe’s second-biggest discount airline said annual earnings will beat estimates following a 20 percent surge in business bookings.

Pretax profit for the 12 months ending Sept. 31 will be in the range of 200 million pounds ($326 million) to 230 million pounds, Luton, England-based EasyJet said today, sending the stock as much as 19 percent higher. Analysts were predicting earnings of 179 million pounds, based on 22 estimates.

Chief Executive Officer Carolyn McCall began offering flexible fares via travel agents last November in an effort to attract more business people, extending the plan to the web in May. EasyJet, which is also targeting corporate travel by adding frequencies on key routes, said today that third-quarter revenue jumped 23 percent from a year earlier to 935 million pounds.

“This is a very good performance, with fantastic revenue against a very difficult consumer background,” said Wyn Ellis, a Numis Securities analyst in London who rates EasyJet “add.”

EasyJet stock closed almost 18 percent higher at 368 pence in London, the sharpest gain since June 6, 2003, and the best performance in the index of Britain’s top 350 traded companies. That pared the stock’s decline this year to 16 percent and values the company at 1.58 billion pounds.

Punctuality

EasyJet boosted the number of corporate travelers by one- fifth in the third quarter, helping to grow per-seat sales by 5.2 percent to 56.02 pounds. Business revenue is rising even as economic concerns weigh on leisure bookings at European carriers. U.K. consumer confidence fell in June as the economic outlook dimmed and higher fuel prices left households with less disposable income, Nationwide Building Society said yesterday.

“The new focus seems to be paying off,” said Jonathan Wober, a Societe Generale analyst in London with a “buy” rating. “People going on business tend to book later and pay more.”

EasyJet’s improved punctuality is also boosting corporate acceptance, Wober said. More than 81 percent of flights were defined as on time last month, compared with 57 percent a year earlier, when flights were hampered by crew shortages and rostering problems at the airline’s main London Gatwick base.

“The strong operational and commercial performance in the quarter reflects the continued successful implementation of the strategy we outlined last November,” McCall said in a statement, adding that 75 percent of summer seats have already been sold.

Fleet Issue

The third-quarter passenger total advanced 17 percent, slightly ahead of the increase in seats, so that the load factor, a measure of occupancy, rose 0.2 percentage point.

Stephen Furlong, an analyst at Davy Stockbrokers in Dublin, upgraded EasyJet stock to “outperform” from “neutral.”

Ryanair Holdings Plc, Europe’s biggest low-cost carrier, rose 4.8 percent in Dublin. It reports earnings July 25.

EasyJet took delivery of 11 Airbus SAS A320 jets in the three months, while returning seven to leasing companies, leaving it with a 203-strong fleet at the end of June.

Stelios Haji-Ioannou, the airline’s founder and largest shareholder, said July 13 it should halt a January order for 35 planes after failing to clear the plan with investors. The fleet spat, running since 2008, may hamper the performance of EasyJet stock, said Andrew Fitchie, a London-based analyst at Investec.

“The shares could continue to be somewhat turbulent if Stelios’s EasyGroup continues its dispute with the board,” the analyst said in a note to clients.

--Editors: Chris Jasper, Chad Thomas.

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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