easyJet sees a tough Winter ahead, but expects "substantial" profit improvement in 2010

easyJet released (17-Sep-2009) the following details as part of its financial results for the 12 months ended 30-Sep-2009 (FY2009):

• Fuel hedges: a GBP330 million loss on fuel hedges in the 12-month period, offset by a GBP120 million gain on USD hedging;
• Outlook: CEO, Andy Harrison, forecast a GBP100 million improvement in profit in FY2010 "as higher price fuel hedges roll off". Mr Harrison also raised easyJet's cost-cutting target from GBP125 million by 2011 to GBP190 million by 2012. The carrier added that it anticipates a tough winter, but 2010 should see a "substantial" profit improvement;
• Forward bookings: easyJet stated 45% of seats for 1H2010 are booked, with revenue per seat only marginally lower on a year-on-year basis;
• Capacity: Plans to increase capacity by "around 10%" in FY2010.
• Business markets: easyJet stated it has strengthened its position in key European business markets, such as Paris, London Gatwick, Milan and Madrid, with over a 10% increase in slots at capacity constrainted airports;
• Ancillary revenue: Increased by 41% to GBP516.3 million in 2009, driven predominantly by increases in the checked bag charge. Bag charge revenue delivered GBP238.1 million in revenue in 2009, a 65% year-on-year increase. On a unit basis, ancillary revenues were up 38% to GBP9.77 per seat, while overall revenue per seat was up 11% to GBP50.47/seat;

easyJet: "We hedge to reduce market volatility. Over the past 18 months, the oil price went from USD70 to USD147 and then, four months later, back to USD40. It's very difficult to run an airline with that level of volatility," Andy Harrison, CEO. Source: The Telegraph, 17-Sep-2009.

easyJet: "This is an extremely resilient performance making easyJet the best performing European airline based on our robust yields. We are one of the very few European airlines to make a profit during the last 12 recessionary months. This is a tribute to the strength of our business model and the quality of our people and our network. We offer the best prices to the most convenient airports. We see a tough winter ahead. We are focussing our efforts on further cost savings and efficiency improvements together with optimising route profitability and aircraft allocation. We shall also benefit as our fuel hedges adjust to market prices. Putting all this together, at current fuel prices and exchange rates, we expect easyJet to make substantial profit improvement in 2010," Andy Harrison, CEO. Source: Company Statement, 17-Sep-2009.