easyJet narrows half-year losses as revenues rise

published 15 May 2013

easyJet narrowed its half-year losses as the low-cost airline took initiatives to boost revenues and cut costs.

Loss before tax for the six months to March 31st 2013 came to £61m, a 45.5% drop from the prior year's loss of £112m.

Revenue grew 9.3% to £1.6bn from £1.4bn boosted by the timing of Easter, competitor capacity reductions, returns focused changes to the company's network and improvements to the revenue management system.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Average load factor - the number of passengers as a proportion of the number of seats available for passengers - increased by 1.7 percentage points to 88.6% while capacity rose 3.3% to 30m seats.

Cost per seat excluding fuel expanded 3.4% on a constant currency basis and by 3.1% on a reported basis to £38.89.

Year-on-year cost increases were largely driven by increased charges at regulated airports and from more weather related disruption and de-icing costs.

Nevertheless, the group delivered an incremental £25m of savings in the period.

easyJet ended the first half of the financial year with net cash of £433m compared to £42m at March 31st 2012.

"easyJet delivered a strong first half performance, demonstrating the company's structural advantage in the European short-haul market against both legacy and low cost competition, and a continuing resilience against a challenging European macro-economic environment," Chief Executive, Carolyn McCall, said.

"Our performance reflects measurable progress against easyJet's four key strategic objectives that have been amply demonstrated by a significant reduction in the loss for the first half and significant improvement in ROCE [return on capital employed] over the same period."

Earlier this month, John Barton succeeded Mike Rake as easyJet Chairman. Barton, who is also the Chairman of insurance group Catlin, has chaired major quoted companies for over 16 years.

Looking to the year ahead, McCall said the company expects to see further growth.

"Whilst there is always the potential for unexpected events to impact short term financial performance, the outlook for the second half of the financial year combined with the strong reduction in first half losses means that easyJet expects to deliver improved returns and profitability for the year ending September 30th 2013."