easyJet to confirm winter fillip from woes at rival airlines

No-frills airline easyJet will confirm a boost from the demise of rivals and recent woes at Ryanair when it reports results on Tuesday, but a £100 million hit from the weak pound will still see profits tumble.

The carrier revealed last month it had enjoyed a record quarter in the three months to September 30 after it was helped in recent weeks by a shambolic showing from rival Ryanair, which has had to cancel hundreds of flights after miscalculating pilot leave.

It said full-year profits were therefore set to come in at the top end of its forecasts, having carried 24.1 million passengers in the quarter.

But in her last set of results before taking on the top job at ITV, outgoing chief executive Carolyn McCall will confirm the impact the Brexit-hit pound has had on its past year, with profits still set to be as much as 18% lower at between £405 million and £410 million.

All of the fall in profits is accounted for by the £100 million impact of the pound, but trading has also been hit by a turbulent past two years for the airline sector after a raft of terrorist attacks and a price war amid increased competition.

Ms McCall will at least bow out with an unusually strong update on its winter performance, though, as easyJet benefits from not just Ryanair's debacle, but also last month's collapse of Luton-based carrier Monarch, the demise of Air Berlin and Alitalia's administration.

The group has been able to pounce on up to 25 aircraft from Air Berlin as well as up to 1,000 staff from the group, which will see easyJet become the biggest airline operating out of Berlin and boost its overall size by 10%.

It may face pressure on its home turf though given the saga surrounding Monarch.

It will be an immediate challenge for incoming boss Johan Lundgren, a travel sector veteran, who joins on December 1 from tour operator TUI, with rival airlines circling Monarch's coveted runway slots.

Administrators for Monarch are taking their fight over the "valuable" slots to the Court of Appeal after the High Court ruled against them.

And despite a decent winter season so far for easyJet, it is expected to remain tough for the sector over the year ahead, while rival Ryanair is likely to bounce back as it puts its rota woes behind it.

Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said easyJet will need to keep focusing on its all-important load factor - a measure of how well airlines fill their planes.

He said: "With prices likely to remain under pressure from the intense competition that's racking the sector, fuller planes mean lower costs per passenger. That's key to maintaining profitability."


 

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