EasyJet seat revenue rises

Low-cost airline easyJet reported a 0.5 per cent rise in first-quarter revenue per seat yesterday and reiterated its forecast for a 20 per cent rise in full-year pre-tax profit.

The firm also reported a 14.1 per cent rise in first-quarter total revenue to £418 million and said second-quarter revenue would be ahead of its original expectations due to increased checked bag charges and the stronger euro.

"While revenues will be ahead of previous guidance, this impact is largely offset by an increase in costs denominated in euros, principally airport costs, navigation and European based crew costs," it said in a statement.

EasyJet's outlook contrasts with that of bigger rival Ryanair, which warned on Monday there was a "significant chance" its profits would fall in the 2008/09 business year due to high oil prices, weaker sterling and low consumer confidence.

EasyJet said first-half pretax margins would fall between two and three percentage points on increased fuel costs and crew costs running ahead of its original expectations.

Budget airlines, which have increased market share throughout Europe by leveraging their very low cost bases to cut ticket prices, face weakening profitability on high fuel costs.

EasyJet, which reported a 48 per cent jump in annual profit in November, expects its growth rate to slow to 20 per cent in the year to end-September, while Ryanair cautioned profits could fall by as much as 50 per cent.

EasyJet, which saw December-quarter passenger numbers rising by 12.4 per cent to 9.1 million, said January passenger numbers grew 7.3 per cent.

Load factor, the proportion of available seats sold, fell by 2.9 percentage points to 72 per cent in January, although forward bookings for February and March showed an improving trend.

"January traffic data appeared to disappoint, with load factor down," JP Morgan analysts said.

"This is consumer pushback again, but easyJet has already reacted to the initial volume weakness by cutting lead-in fares to re-stimulate bookings and get back to load factors that give pricing power."