easyJet plc Drops As Profit Comes Under Pressure

easyjetThe share price of easyJet (LSE: EZJ) is currently down over 4%, following the publication of an interim management statement for the third quarter, ending 30 June 2014 in which the airline advised that its pre-tax profit for the full year should be in the range £545m to £570m.  Despite representing a rise of at least 14% over last year, the upper end of the range is below consensus analyst forecasts of around £576m.

Total revenue rose 8.6%, to £1,240m, with a 9.4% increase in passengers carried, which was up to 17.9m.  Revenue-per-seat increased by 2.7% on a constant currency basis (1.7% reported), to £62.47 per seat, despite what easyJet describes as “less benign capacity environment“, combined with a “significant increase” in the airline’s European capacity at Gatwick — due to the purchase of Flybe slots in May 2013 — which is causing “short term yield pressure“.

There was an increase of 1% in easyJet’s cost-per-seat (excluding fuel) on a constant currency basis (a decrease of 1.3% reported), which was better than the guidance issued by the company back in May. The increase resulted from increase airport charges (especially in Italy), plus planned increases maintenance and lease costs. 

Commenting on the starement, CEO Carolyn McCall said:

We will continue to invest in building leading network positions and this combined with a compelling customer proposition, low cost base and strong balance sheet leaves easyJet well positioned to continue to deliver sustainable growth and returns.

“With 77% of second half seats now booked, easyJet expects to grow profit before tax from £478 million for the year to 30 September 2013 to a range of £545 million to £570 million for the year to 30 September 2014 assuming no further significant disruption. This range includes the impact from the situations in Israel, Egypt and Moscow.

At 1,345p per share, easyJet’s share price is down 12% so far this year versus a FTSE 100 that’s risen just a smidgen (o.44%). But over five years the airline has soared away, with easyJet’s share price up 335%, versus an increase of just 48% for the FTSE 100.

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Jon Wallis has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned.