easyJet: “benign capacity environment” helps strong 3Q revenue growth and improved profit outlook

In its 3QFY2013 (Apr-Jun) trading update, easyJet has again beaten expectations, with revenue per seat up 6.7% versus previous guidance of around 4%. According to CEO Carolyn McCall, "easyJet has delivered a strong performance in the third quarter in a benign capacity environment" as competitors continued to cut capacity on its routes.

Moreover, easyJet sees better revenue performance continuing into 4QFY2013. Its newly announced FY2013 pre-tax profit target range of GBP450 million to GBP480 million, 40% to 50% higher than last year, is ahead of the GBP430 million consensus forecast.

The stock market has welcomed strong earnings growth and easyJet's plans to order new Airbus aircraft. easyJet's shares are up 165% over the past 12 months and have more than quadrupled over the past two years. Founder and leading shareholder Sir Stelios Haji-Ioannou may not agree with management and the rest of the shareholders, but at least he can console himself that his family's holding is now worth around GBP2 billion.