UPDATE 2-Budget airline easyJet lifts first-half results forecast

Tue Mar 25, 2014 5:02am EDT

* Sees H1 loss at 55-65 mln stg vs 70-90 mln guidance

* Helped by cost control, allocated seating initiative

* Shares rise 4.4 pct (Adds analyst comment, share price)

By Sarah Young

LONDON, March 25 (Reuters) - British budget airline easyJet upgraded its first-half results forecast by 25 percent on Tuesday, sending its shares close to an all-time high on the back of tight cost control and the popularity of its allocated seating programme.

EasyJet said it expected to post a pretax loss of between 55 million pounds ($91 million) and 65 million pounds for the six months to March 31, an improvement on previous guidance for a loss of 70 million pounds to 90 million pounds.

The group, which like rivals traditionally makes a loss over the winter when fewer customers fly, reported a loss of 61 million pounds for the same period in 2012-13.

The upgrade was also helped by benign weather, which has meant fewer weather-related disruptions, easyJet said.

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

Shares in easyJet, up more than 60 percent over the last 12 months, jumped 4.4 percent in early trading to 1,704 pence, putting them near an all-time high reached earlier in March of 1,760 pence.

Analysts said that although the company had not commented on prospects for its fiscal second half, there were likely to be upgrades to consensus forecasts.

EasyJet chief executive Carolyn McCall said the upgrade showed the firm's "structural advantage" against not only rival low cost carriers, such as Ryanair, but also legacy carriers.

Those former state-owned entities, such as Germany's Lufthansa, are battling against low-cost carriers to maintain market share in Europe's short-haul sector.

"I think what's encouraging is that the improvement is on the revenue and the cost side," Panmure Gordon analyst Gert Zonneveld said.

Revenue per seat in the six month period is expected to rise 1.5 percent, easyJet said, higher than a forecast given in January of "very slightly up", on a boost from allocated seating and other initiatives.

The forecast improvement to easyJet's first-half performance comes despite it guiding to a hit of up to 8 million pounds from additional unit fuel costs for this first-half compared with the same period in 2012-2013.

Analysts currently expect easyJet to report a pretax profit of 560 million pounds for the year ending September 2014, according to a Thomson Reuters poll.

($1 = 0.6065 British Pounds) (Editing by Kate Holton and Mark Potter)