EasyJet aiming for 20% rise in profits

Feb 8 2008 by Alex Turner, Liverpool Daily Post

EASYJET said it is confident of a 20% rise in profits this year after yesterday releasing positive first-quarter results showing revenues rose by more than 14% to £418m.

The budget airline, which operates 19 routes from Liverpool John Lennon Airport, were bullish about its prospects for 2008 after they carried 9.1m passengers in the final three months of 2007, 1m more than in the previous year. This increase was largely due to contributions from new European markets in Italy, Spain and Switzerland.

The airline’s optimistic note comes just three days after its main rival Ryanair, which has 42 routes from Liverpool, warned its profits could be halved in the next 12 months.

The Dublin-based airline expressed concern about weaker consumer demand and higher oil prices. Ryanair described its fuel position as “essentially unhedged”.

However Easyjet said there was “no material change” in its hedging position, one of the factors that is boosting its confidence.

Easyjet said its load factor, the number of passengers travelling as a proportion of capacity, fell 2.9% in January to 72%, although bookings for February and March showed an “improving trend”.

It added: “Forward bookings are in line with expectations despite the uncertain macro-economic environment.”

The European growth also gave the airline a revenue boost thanks to the strength of the euro against the pound.

It was also helped by the doubling of its checked-in luggage charges to £3.99, which boosted “ancillary” revenues by more than 40% to £5.1m over the period.

Neil Pakey, managing director of Liverpool John Lennon Airport, is also positive about the prospects for low-fare airlines in 2008.

He said: “Despite the high prices at the moment Liverpool’s prospects look pretty good.

“We have seen growth from both the airlines. Easyjet recently launched a Lisbon service and confirmed two more planes will be based at Liverpool, and Ryanair also announced new routes and is starting flights to Nantes from April.

Around 5.5m passengers passed through the airport during 2007 and Mr Pakey has his sights set on 6m this year, although he is cautious about expecting a huge upsurge because of the Capital of Culture status.

He said: “Some people expect a spike in 2008 but the build-up is over the last five years, when we have had double digit growth. We can also expect a legacy effect.”

alex.turner