easyJet losses narrow for 1H2010 due to lower fuel costs

easyJet shares (-4.2%) suffered the biggest loss of the day of the LCCs tracked by CAPA's Peanuts! Daily after reporting a narrowed net loss of GBP58.9 million for the six months ended 31-Mar-2010, compared with a loss of GBP116.5 million in the previous corresponding period.

Losses before tax were lower than expected, at GBP78.7 million, compared with GBP116.5 million in the previous corresponding period. According to Dow Jones, analysts had expected the carrier to report a pre-tax loss of GBP80 million to GBP95 million.

This resulted in an underlying pre-tax margin of -6.7%, compared with -12.6% in 1H2009 and +2.1% in FY2009.

easyJet profit before tax margin: 2004 to 1HFY2010

The carrier stated the improvement was driven by a unit fuel cost decrease equivalent to GBP80 million, partially offset by lower interest income of GBP11 million and GBP25 million of lost contribution and additional cost due to unusual snow disruption.

Operating losses were also narrowed to GBP66.5 million, compared with a loss of GBP115.5 million in the previous corresponding period. Total revenues rose 13.3% year-on-year, to GBP1,170.7 million, as passenger revenues rose 11.4% and ancillary revenue rose 20.9%.

Passenger numbers for the period grew 10.6%, to 21.5 million. Load factor also improved, up 2.1 ppts, to 85.0%, as traffic (RPKs) rose 12.4% on the back of a 9.4% increase in capacity (ASKs).

easyJet revenue growth and passenger number growth: 2004 to 1H2010

Estimated full year pre-tax profit would have been in the range of GPB175-GBP200 million at current exchange rates and fuel price, prior to the recent volcanic ash related disruption. This disruption has caused additional cost and lost contributions estimated at between GPB50 million and GBP75 million. Therefore, the carrier has revised its profit expectations for the year to a range of GBP100 million to GBP150 million at current exchange rates and fuel price.

Elsewhere, Jet2.com owner, Dart Group (-3.2%) and Air Berlin (-2.4%) were also down, while Norwegian (+0.8%) was the only European LCC to gain yesterday.

Selected LCCs daily share price movements (% change): 11-May-2010

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