Britains low-cost carrier EasyJet Plc announced on Thursday that thanks to less fuel expenses the company now expects higher first-half results.
Europes second-largest budged airline said that it now expects to generate a pre-tax result of between a loss of £5 million and a profit of £10 million for the six months ending March 31, better than its previous estimate of a loss between £10 million and £30 million. In comparison easyJet reported a loss of £53 million during the same period a year earlier.
It is not unusual for a low-cost carrier to report a loss during the winter season as fewer people choose to travel and those who do usually benefit from the lower-priced tickets.
The company also said that the depreciation of the euro against the dollar significantly boosted overall results. EasyJet previously estimated that currency shifts would help performance by £10 million, but today the company said it now expects that figure to stand around £20 million.
However, it warned that if exchange rates remain at their current positions throughout the entire year they would have a £40 million adverse impact in the second half. Overall it said that currency shifts will dent full-year results by £20 million.
The company also said that lower fuel prices are expected to boost the companys first-half results by £35 million, at the top of the range of its previous estimate. Additionally, the company said that fuel prices would have a favorable impact on full-year results of between £90 million to £120 million, lowering the top end of its earlier estimate by £10 million.
For the full-year the company restated that it expects a capacity growth of 5%, but said that expenses are projected to edge 2.5% versus its previous estimate of 2%, excluding fuel.
“We continue to expect that lower fuel costs will be beneficial for our customers as fares adjust. easyJet continues to be well positioned to deliver sustainable returns to shareholders due to its compelling network, low cost base and strong balance sheet,” said Chief Executive Carolyn McCall.
The company is set to announce its final first-half results on May 12.
EasyJet gained 0.32% on Wednesday and closed at GBX 1 890 in London, on Thursday the stock dropped 3.76% to GBX 1 819 at 10:39 GMT, marking a one-year increase of 5.57%. The company is valued at £7.51 billion.
According to the Financial Times, the 22 analysts offering 12-month price targets for easyJet have a median target of GBX 1 900, with a high estimate of GBX 2 210 and a low estimate of GBX 1 500. The median estimate represents a 0.53% increase from the last closing price.
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