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London - EasyJet forecast that earnings will rise 7.6% this year as Europe’s second-biggest discount airline sees the benefits of a slump in oil prices and holds back spending.
Pretax profit in the 12 months through September will probably about match the £738m that analysts are predicting, EasyJet said in a statement on Tuesday, citing estimates the carrier has gathered. Revenue in the three months ended December 31 declined 0.1% to £930m, missing the £946m average of estimates compiled by Bloomberg, because of declining fares and currency shifts.
European airline executives have been reluctant to predict that a drop in oil prices, currently at about a 12-year low, will substantially boost profit. Ryanair Holdings CEO Michael O’Leary said in November that his airline will pass “some or maybe all” of its lower fuel costs on to customers.
EasyJet flew 69.8 million passengers in 2015, a 7% jump, even as a terrorist attack in Paris and the presumed bombing of a Russian passenger jet over Egypt’s Sinai peninsula late last year hurt demand.
“This year we will consolidate” a low-fare strategy “with a relentless focus on cost reduction which is already delivering” results, EasyJet CEO Carolyn McCall said in the statement. “This will ensure that EasyJet continues to win and continues to grow revenue, profit and dividends.”
EasyJet has been adding seats on existing routes, widening links between its bases at primary airports and introducing a loyalty program to boost its business traveler traffic.
The company said on Tuesday that, while the French and Egyptian terrorist incidents “have had a more damaging impact on fares than we had expected,” costs per seat have been less than the airline predicted. Reservations are showing a “marked improvement” in the fiscal second quarter versus November and December, it said.
