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* Shares drop 6 percent, top FTSE 100 faller
* Weak pound and late Easter hit budget airline's results
* Keeps outlook as competition, price pressures ease
* Will take 30 Airbus A321neo planes instead of A320
By Alistair Smout
LONDON, May 16 British budget airline easyJet
said it was looking to bigger planes to help keep a lid
on costs after it reported a larger than expected first-half
loss on Tuesday.
Europe's largest low cost carrier after Ryanair said
the weak pound and the late timing of Easter this year had hit
its first-half results, sending its shares down more than 7
percent, although it still expects a full-year profit.
The company announced that it had arranged to convert part
of an Airbus order to larger planes, which would cut costs per
seat, and was also postponing some orders of smaller planes.
At the same time, it was seeing signs that revenue pressure
was easing with rivals holding back on growth in some of its big
"Our bookings for the summer are ahead of last year showing
that demand to fly remains strong," Chief Executive Carolyn
EasyJet reported a headline pretax loss of 212 million
pounds ($273 million) for its first half, widening from a 21
million pound loss a year ago and higher than Thomson Reuters
estimates for a loss of 195.75 million pounds.
The airline, which often makes a loss in winter and a profit
in summer, said it was comfortable with the market consensus for
full year pretax profit of 367 million pounds. It also stuck to
a target to keep costs per seat flat in its 2019 financial year
compared with 2015, although they are due to rise this year by 1
"We said it would be a bit of a bumpy ride as we make some
investments," Chief Financial Officer Andrew Findlay told
analysts when asked about cost targets.
The first half figures included an estimated 45 million
pound hit from Easter falling into the second half of its
financial year this year, and a negative net currency impact of
82 million pounds.
EasyJet shares were down 7.5 percent in afternoon trade but
they had risen around 40 percent in the past three months.
"The recent share price rally needed an upgrade, in our
view, with too much hope that better long-haul trading seen at
flag carriers would come to pass in short-haul too," said
analysts at Panmure Gordon.
"Our Sell rating reflects the stuttering growth profile."
EasyJet said it will take 30 Airbus A321neo planes with 235
seats from next summer, instead of 30 smaller A320neo planes.
The larger planes will enable it to reduce costs per seat by
about 8-9 percent compared with the 186-seater A320neo.
McCall said the larger planes would probably be used to fly
out of airports such as London Gatwick, Paris Orly and Amsterdam
where it is hard to get new slots.
CFO Findlay said easyJet had exercised some deferral rights
on Airbus planes as part of the switch to the larger planes in
order to keep a lid on spending.
Together with plans to exit some operating leases, that means
easyJet now expects to have 343 planes in its fleet in 2021,
versus a previous plan for 357. Its capital expenditure plans
will come down by 250 million pounds over the next three years.
The airline is seeking a new operating licence in another EU
member state to ensure it can continue flying within and between
EU member states following Brexit, which it said it would secure
before the summer.
($1 = 0.7761 pounds)
(Additional reporting by Victoria Bryan in Berlin; Editing by
Keith Weir and Susan Fenton)