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easyJet sees large profitability decline but improvements ahead; Air Berlin profitability improves

18-Nov-2009

easyJet’s shares fell 3.6% yesterday, after the carrier reported a 91% slump in operating profit and an 82% decline in net profit, to GBP60.1 million and GBP71.2 million, respectively. The LCC added that, despite the reduced earnings in FY2009, it was “one of the very few European airlines to make a profit during this last 12 recessionary months”.

easyJet expecting substantially higher profit in 2010

The carrier, which was negatively effected by rising fuel costs and lower interest income in the 12-month period, added that it expects profits to be substantially higher in 2010, despite stating “we can’t see any green shoots” in the economy.

Explaining the weaker result, CEO, Andy Harrison, in an interview with BBC Radio, said “the issue with our profits is to do with the way in which our fuel hedging works; we average fuel prices which means that there is a delay between the drop in market prices and the benefit to easyJet so we'll see a GBP100 million improvement to our profits in 2010”.

Air Berlin EBIT up by double-digits, net profitability sees triple digit improvement

Air Berlin’s shares fell 1.4% yesterday, despite Germany’s second largest carrier reporting EBTIDAR, EBIT and net profit improvements in the three months ended Sep-2009. During the third quarter, Air Berlin reported a 9.4% increase in EBITDAR, to EUR229 million, with a double-digit improvement in EBIT (+33.5% to EUR118 million) and a triple digit net profit improvement (+111% to EUR95.2 million). Revenues were down 8.2% to EUR974 million, due to the carrier’s planned capacity reductions.

The carrier, which will publish detailed information for the three months ended 30-Sep-09 on 19-Nov-2009, also maintained its previous forecast that it will achieve an improved year-on-year operating result in 2009, despite the challenging economic environment.

Brazil’s economic growth accelerating

GOL’s shares jumped 5.6% yesterday, as Brazil’s Bovespa index rose to the highest level in 17 months on speculation economic growth is accelerating.

President, Luiz Inacio Lula da Silva, stated Brazil’s economy may have expanded approximately 9% in 3Q2009, adding that the economy is growing at a “Chinese pace”. Budget Minister, Paulo Bernardo, added that the government may revise its forecast for economic growth for 2010 from the current forecast of 4.5% to 5%.

 Selected LCCs daily share price movements (% change): 17-Nov-09


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