UPDATE 2-Cost-cutting business travellers lift easyJet revenue

Thu Jan 23, 2014 6:39am EST

* Q1 revenue up 7.7 pct, in line with expectations

* Boosted by 8.9 percent rise in business passengers

* Sees H1 results hit by timing of Easter

* High-flying shares fall as much as 3.6 pct (Adds analysts, detail, background, shares)

By Sarah Young

LONDON, Jan 23 (Reuters) - EasyJet's success in attracting cost-conscious business travellers helped the no-frills British airline to report a 7.7 percent rise in first-quarter revenue, though it warned the timing of Easter would hit first-half results overall.

Shares in Europe's second-biggest budget airline by passenger numbers, which have doubled in value over the past year, slipped as much as 3.6 percent on Thursday.

"The negative is that it's exactly as people expected it to be," said Panmure analyst Gert Zonneveld of the results.

"Given the shares have had a phenonmenal run, you would expect a bit of profit-taking."

EasyJet has stolen a march on bigger rival Ryanair by introducing measures such as allocated seating and allowing passengers to change their flights in a bid to appeal to business travellers.

While easyJet posted a 51 percent rise in profit in its 2012-13 financial year and announced plans for a special dividend for shareholders, Ryanair cut its annual profit target twice in two months late last year.

EasyJet said on Thursday that business passenger numbers rose 8.9 percent in the three months ended Dec. 31, the first quarter of its financial year, more than double the 4.2 percent rise in overall passengers.

However, the Luton, England-based firm said the timing of Easter, which this year falls in April and so outside the first half of its financial year, would hit revenues in the six months to March 31. In the first half of last year, revenues got a 25-million-pound ($41.5 million) boost from Easter, it estimated.

As a result the group, which traditionally sees fewer customers fly over the winter season, expects a first-half loss of between 70 million pounds and 90 million pounds, more than the 61 million pounds loss in the same period last year.

"EasyJet has made a good start to the year. The performance in the quarter demonstrates our continued focus on cost, progress against our strategic priorities and easyJet's structural advantage in the European short-haul market," chief executive Carolyn McCall said in a statement.

A focus on costs would help the company continue to deliver sustainable growth, it said, adding it expected first-half revenue per seat to rise slightly on the prior period.

EasyJet said its first-quarter revenue rose 7.7 percent year-on-year to 897 million pounds.

While in line with expectations, Richard Hunter, head of equities at brokers Hargreaves Landsdown, said the update did not match the "great expectations" to which easyJet investors had become accustomed.

At 1055 GMT, easyJet shares were down 2.8 percent at 1,694 pence, valuing the business at about 6.7 billion pounds.

Ryanair, which is in the midst of a drive aimed at improving its image and wooing business travellers, is due to report its third-quarter results on Feb. 3.

($1 = 0.6030 British pounds) (Editing by Mark Potter)

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