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EasyJet posts 60% increase in profits

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EasyJet posts 60% increase in profits

Nov 15, 2011 08:17AM GMT

EasyJet has delivered a 60% rise in full year pre-tax profits to £248 million and is returning £195 million to shareholders.

The budget carrier, under pressure from founder and major shareholder Sir Stelios Haji-Ioannou over dividend payments, said it was making “tangible returns” to shareholders despite a £100 million hike in fuel costs.

Overall capacity rose by 11.5% due to network expansions from Gatwick and in France and Switzerland. Passenger numbers rose 11.8% to 54.5 million and load factor improved by 0.3 percentage points to 87.3%.

Total revenue grew by 16.1% to £3,452 million resulting in growth of 4.1% in revenue per seat to £55.27. Ancillary revenue rose by 12.9% to £11.52 per seat following “decisive management action” in the second quarter of the year.

Passengers originating outside of the UK now account for 56%, an increase of 3 percentage points compared with 2010.  Those flying on business increased by almost one million to 9.5 million

Underlying cost per seat fell by 1.3% for the full year with strong performances in ground handling, maintenance and disruption-related costs, the carrier said.

Chief executive Carolyn McCall said: “Despite the headwinds of higher fuel costs and a weak and uncertain economic outlook, our focus on customers, robust operational performance, the strength of EasyJet’s network combined with cost control and capital discipline means that EasyJet is well placed to succeed.”

The airline took a swipe at government for reversing its election promise to turn Air Passenger Duty in to a per plane tax.

“Instead it is proposing to lower the tax on long-haul flights and increase it on short-haul flights,” EasyJet said. “Evidence shows this is both economically and environmentally damaging.

“Aviation’s entry into the European Union Emissions Trading System means that there is no longer any environmental case for taxes on aviation.”

The airline also voiced concern over “monopoly infrastructure” airport and airspace providers across Europe which continue to impose higher charges despite the uncertain economic climate.

“Monopoly airports need to become more efficient, with infrastructure and associated charges built around the needs of passengers on point-to-point carriers such as easyJet. This will bring wider economic benefits by promoting tourism and trade,” EasyJet said.

Looking forward, the carrier said: “The macro-economic environment remains challenging for all airlines as weak consumer confidence across Europe slows the rate at which higher fuel prices and increased taxation can be passed onto passengers.

“Against this backdrop EasyJet is taking a cautious approach to capacity deployment.  As a result, capacity in the first half of the year is planned to be flat (adjusting for disruption in the first part of the prior year), with growth of around 4% for the full year.

“With around 45% of winter seats now sold, in line with the prior year, first half passenger revenue per seat is expected to grow by mid-single digits with planned improvement in yields, bag charges and other ancillary revenues.

“Cost per seat excluding fuel and currency impact is expected to grow by 2% to 3% for the full year and by 4% in the first half of the year, assuming normal levels of disruption, driven by price increases at regulated airports and investments in new revenue streams.

“At current fuel and exchange rates easyJet’s fuel bill is anticipated to increase by £220 million in full year 2012 compared to full year 2011.

“Despite the headwinds of higher fuel costs and a weak and uncertain economic outlook, our focus on customers, robust operational performance, the strength of EasyJet’s network combined with cost control and capital discipline means that EasyJet is well placed to succeed.”

One in three Brits did not holiday in 2011

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WTM: One in three Brits did not holiday in 2011, study finds

Nov 07, 2011 14:46PM GMT

WTM: One in three Brits did not holiday in 2011, study finds

Holidays are now seen as a discretionary spend rather than a necessity, according to the World Travel Market 2011 Industry Report (pdf).

The report, which  polled more than 1,000 UK holidaymakers, showed that over a third (38%) did not have a holiday this year. A holiday was counted as seven nights in the UK or overseas.

In order to find 1,000 holidaymakers who had been on holiday, the report actually had to survey 1,611 consumers. Of those that did holiday in 2011, almost six out of ten (59%) only took one.

The low figure was blamed on the impact of the recession on household budgets, and the increase in Air Passenger Duty.

More than a quarter, 26%, said the increase in costs of travelling due to taxes was a major issue. Just over a third, 31%, said they will travel less often. For 5%, 2011 was the first year they did not travel abroad because of the increase in the cost of holidaying due to taxes.

WTM chairman Fiona Jeffery admitted the findings that consumers no longer viewed holidays as “sacrosanct” was a concern.

“For the first time the report indicates people are beginning to cut back on having a holiday and that is a concerning sign,” she said.

But the report highlighted opportunities for the industry, such as the London 2012 Olympics and potential of the emerging BRIC nations – Brazil, Russia, India, China and South Africa.

The report, which also polled the views of more than 1,000 senior industry executives and WTM exhibitors, showed more than eight in ten executives believed major sporting events would have a positive impact to London and the UK.

However, UK hoilaymakers remained uninterested in the games with only 8% saying they would incorporate the London Olympics into their holiday.

Monarch denies previous refinancing ‘failed’

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Monarch denies previous refinancing ‘failed’

By Ian Taylor |  Nov 03, 2011 12:30PM GMT

The Monarch Group has denied a £75-million refinancing of its loss-making airline was necessary because a previous financial restructure had failed.

Monarch executive chairman Iain Rawlinson said: “The 2009 refinancing was a success. It allowed the business to return to profitability last year.”

The group announced the £75 million cash injection from its controlling shareholders, the Swiss-based Mantegazza family, on Thursday. The move followed a £45-million refinancing two years ago.

Rawlinson reported a £45 million loss for the year to October 31. But he told Travel Weekly: “What we are looking at here is a response to a long-term re-shaping of the market.

“We made a decision in May this year, when oil prices had been $110 a barrel for several months, that high oil prices were here to stay and we had to reshape the business. That was the priority.

“We spent May to July developing a plan for a changed, higher-price environment and that is what the shareholders have accepted. We are taking the initiative to ensure the business can operate successfully in a changed environment.”

Rawlinson said he did not expect market conditions to improve next year and consumers would have to adjust to paying higher fares.

He said: “It is inevitable the cost of flying is going to rise. Fuel costs have increased on average 25%-30% this year – although I’m not suggesting all that will be passed through to consumers. It is incumbent on all of us in the industry to run our businesses more efficiently.”

Rawlinson conceded: “We made a substantial loss [on the current year]. We are very cautious about 2012. But prospects for recovery in 2013 are better. We expect the market in 2013-14 should show some signs of recovery, based on a hopeful return of consumer confidence.”

He attributed the losses for 2010-11 solely to Monarch Airlines, reporting tour operator Cosmos and the group’s aviation engineering business, Monarch Aircraft Engineering, had been profitable.