September 28, 2018 / 6:26 AM / 23 days ago

easyJet profit boosted by Ryanair cancellations

LONDON (Reuters) - British low cost airline easyJet (EZJ.L) forecast annual profit at the upper end of expectations, showing the benefits of robust demand and cancellations at bigger rival Ryanair (RYA.I) in 2018.

An EasyJet airplane is seen on the tarmac at the Charles De Gaulle airport in Paris, France, April 10, 2018. REUTERS/Stefano Rellandini

The carrier’s update on Friday came as Ryanair (RYA.I) braced for strikes across six European countries, forcing flight cancellations that will disrupt the travel plans of 40,000 customers.

But easyJet said the outlook for revenues per seat for the first half of next year was negative, and the measure would fall by low to mid-single digits, reflecting the absence of a number of one of factors that helped revenues this year.

easyJet’s shares were subdued after the update, trading 0.1 percent higher at 1,328 pence at 0818 GMT, reversing earlier losses of as much as 3 percent.

easyJet said it would produce a profit increase of about 40 percent in its 2018 financial year to Sept. 30, helped by the one-off issues, such as the bankruptcies of airlines Monarch and Air Berlin, and issues at Ryanair.

Analysts said their absence in the coming year, plus the timing of Easter, a fuel price rise and Brexit uncertainty and now also the revenue per seat guidance meant that some consensus profit forecasts for next year may be cut.

“The market will probably assume based on this, kind of flattish profits year on year, but they haven’t guided (on) that,” Davy analyst Stephen Furlong said.

For the 12 months ended Sept. 30, easyJet said pre-tax profit would be between 570 million pounds ($746 million) and 580 million pounds, at the upper end of the 550-590 million pounds figure it gave in July.

Currently analysts expect easyJet to post pretax profit of 660 million pounds for its 2019 financial year.

easyJet’s positive performance contrasts with Ryanair, which has struggled with months of strikes, including Friday’s which will affect about 10 percent of its flights. The strikes plus a series management mis-steps that have helped to push its share price down 23 percent in a year.

That compares with a rise of 8 percent at easyJet.

easyJet said it would provide further details on its 2019 outlook when it announces full-year results on Nov. 20.

Reporting by Sarah Young, editing by James Davey and Jane Merriman

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