The failures of Monarch and Air Berlin together with strikes at rival Ryanair have given easyJet a collective boost.
The UK’s largest budget carrier today projected annual pre-tax profits of between £570 million and £580 million – in the upper half of previous guidance – despite continued industry-wide air traffic control disruption.
“Disruption across Europe continues to be an industry wide issue and is having an impact on revenue, cost and operational performance, with the main causes being European industrial action and air traffic restrictions,” the airline said in a trading update this morning.
The airline’s annual passenger carryings, excluding Berlin Tegel operations, are expected to increase by 5.4% to about 84.6 million, driven by an expected increase in capacity of 4.2% to 90.3 million seats.
The rise was lower than originally planned due to the level of external disruption, the airline said. Load factor for the full year is expected to increase by 1.0 percentage points to 93.6%.
Total revenue, including Tegel, is projected to be around £5.9 billion.
Total annual fuel costs are expected to be about £1.2 billion, including an expected additional £15 million cost as a result of a US dollar foreign exchange impact and carbon Emissions Trading System (ETS) costs.
The airline revealed a rethink in its technology planning after three years of investing in a commercial IT platform.
This has delivered revenue benefits through “significant improvement” in the customer facing website and seating capability, as well as improvements in underlying resilience and control systems.
“However, easyJet has now made the decision to change its approach to technology development through better utilisation and development of existing systems on a modular basis, rather than working towards a full replacement of our core commercial platform,” the airline said.
“As a result of this change in approach, we are recognising a non-headline charge of around £65 million relating to IT investments and associated commitments we will no longer require.
“EasyJet will continue to invest in its digital and e-commerce layers that will enable it to continue to offer a leading innovative, revenue enhancing and customer friendly platform.”
Chief executive Johan Lundgren said: “EasyJet expects to deliver a strong performance in both Q4 and the full year, driven by better-than-expected growth in passenger and ancillary revenues, as well as reduced losses at our Tegel operation.
“We now expect our headline profits for the year to be between £570 million and £580 million, at the top half of our guidance range.
“This has been achieved despite higher costs caused by disruption due to third party industrial action and severe weather.
“However, we have benefited from a number of one-off events in 2018, including the bankruptcies of Monarch and Air Berlin, as well as Ryanair cancellations.”
He added: “In the fourth quarter we made the decision to change our approach to technology development. Rather than a full replacement of our core commercial platform, we will be investing in better utilisation and development of existing systems on a modular basis.
“This has resulted in a non-headline charge of £65 million as we re-purpose our systems to create a better service for our customers.
“We look forward to full year 2019 as we continue to invest in the long-term strategic initiatives that we set out at the half year.”
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