easyJet says it continued to deliver a “good commercial performance” in the third quarter despite the challenges presented by significant disruption caused by volcanic ash and, more recently, the combination of air traffic control industrial action and crewing issues in some parts of its network.

Published: 28 Jul 2010

easyJet says it continued to deliver a “good commercial performance” in the third quarter despite the challenges presented by significant disruption caused by volcanic ash and, more recently, the combination of air traffic control industrial action and crewing issues in some parts of its network.

Passenger numbers increased by 3.5% to 12.3 million. The majority of the growth reflects the continued development of non-UK originating passengers which increased by 3.7 percentage points to 53.1% of total passengers.

Total revenue per seat increased by 3.5% to £53.23, driven by passenger revenue growth up 4.5% (reported and constant currency) reflecting the strength of the easyJet network

Ancillary revenue

Ancillary revenues were flat in the period at £9.95 per seat. The checked bag charge, declined by 1.1% in the period to £4.60 per seat as charges were waived in the period immediately after the volcanic disruption.

Ancillary revenues, excluding the checked bag charge, increased by 0.1% per seat in the quarter.

“This is despite the £2.5 million negative impact from regulatory changes to the sales process for insurance products. Hotel and car hire revenues have also declined against a difficult economic environment. As a result of our improved offering, on board spend per head has continued to increase and grew from £1.84 to £2.00. However a change in European Union VAT regulation has negatively impacted margins. Actions to mitigate this impact are now in place,” stated the airline in an official release.

Impact of the volcanic ash on the period results

The disruption to European airspace due to the eruption of the Eyjafjalla volcano had a significant impact on the financial results of the business in the period. Over 7,000 flights were cancelled impacting nearly a million passengers and causing an estimated lost profit of £65 million, full details of which are set out in the table below. Had the current more appropriate ash related flight restrictions been in place throughout the period of disruption, the estimated financial loss from the volcanic ash cloud would have been limited to around £20 million.

Outlook

easyJet mentioned that forward bookings are in line with the prior year and with 64% of the fourth quarter seats now sold, total revenue per seat growth for the final quarter at constant currency is expected to be in the range of 2% to 3%.

“Therefore full year total revenue per seat at constant currency is expected to increase by around 2.5%, a better performance than originally expected,” stated the airline.