Expectation-beating pre-close figures from Luton-based budget carrier EasyJet (EZJ) see the airline among the day's main movers on the FTSE 100, with shares jumping 4.6% to £17.07 on news that both capacity growth and revenue per seat had risen in the six months to 31 March 2014.

Losses before tax are also expected to be between £55 and £65 million, beating the the mid-point of previous guidance (£70-90 million) by around £20 million.

Outperformance on both yield and margin as well as a tight rein on costs look like the key drivers with revenue per seat expected to rise around 1.5% in the six months to 31 March while – as expected – capacity growth added 3.5%.

A milder winter also went some way towards keeping cost per seat down. In January EasyJet reckoned the cost per seat stripping out fuel costs was likely to rise 1.5% but owing to the more benign conditions, reduced levels of de-icing and disruption in the three months to 31 March 2014 have contributed to a better outcome of just 0.5% growth.

When last we covered EasyJet, the prospect of Easter this year falling in the second half of the fiscal year and the group’s first-half results being affected by a shortfall in revenues of as much £25 million, (which is what last year’s holiday added to revenues after falling on 31 March) was a concern for investors. But today, according to James Hollins at Investec, 'EasyJet has delivered a first-half guidance beat, led by the rapid and effective delivery of cost savings and supported by solid expected yield growth (revenue per seat +1.5%) despite Easter moving into the second half in the 2014 financial year.'

The airline remains vulnerable to sectoral risks such fuel price and geopolitical upheaval but Investec raises its guidance from 'hold' to 'buy' with a target price of £18.


Issue Date: 25 Mar 2014