easyJet's Profits Fly Higher

LONDON -- easyJet (ISE: EZJ.L) saw its share price rise this morning by 17 pence, or 3.2%, to 548 pence on the back of encouraging performance figures.

The company, which competes for the budget airline market with Ryanair Holdings and Flybe Group, reported total revenue increasing by 10.5% to 1,033 million pounds.

The total revenue per seat was 57.58 pounds, an increase of 4.7%, and the number of seats flown grew by 7.5% to 17.9 million, with passengers carried increasing by 10.9% to 16 million. The improvements were driven by targeted capacity allocation into higher-yielding markets, the success of the "europe by easyJet" campaign and the recently launched mobile app.

easyJet has also focused on keeping the cost base down and benefited from low levels of disruption so that the cost per seat increased by just 1%, or 3% including fluctuations in the euro. On-time performance improved by 3 percentage points to 87%, and customer satisfaction remained stable at 82%.

It was announced that profit before tax is likely to be in the range of 280 million pounds to 300 million pounds this year.

Commenting on the results, easyJet chief executive Carolyn McCall said:

easyJet's focus on the customer, tight operational and cost management and strict allocation of capital across its leading network means that it is able to continue to perform well financially and operationally despite a tough environment for consumer facing businesses.

The continued strong operational and financial performance of the business combined with the fall in the price of jet fuel means that profit before tax for the year ending [Sept. 30,] 2012 is anticipated to be in the range of 280 million pounds to 300 million pounds, at current fuel and exchange rates, assuming no significant disruption.

Looking forward to the Olympics, easyJet has strengthened staffing levels and introduced daily Olympics meetings with an eye to minimizing the disruption to services. easyJet has seen a fall in demand for flights touching London during the Olympic period, both from inbound business travelers and outbound leisure travelers, but forward bookings show a recovery once the Games have concluded.

The company remains confident -- with cash and money market deposits of 1,096 million pounds, a net debt of 55 million pounds and gearing of 34% -- that it has the competitive advantage to access funding and lower borrowing costs. In addition, it was announced that it would expect to pay a dividend based on a cover of five times available earnings.

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