EasyJet 'unscathed by disruption'

EasyJet 'unscathed by disruption'

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EasyJet is expected to confirm it emerged relatively unscathed from December's snow disruption

Low-cost airline easyJet is likely to confirm that it emerged relatively unscathed from December’s snow disruption when it posts a trading update on Thursday.

EasyJet reported a 7.6% rise in passenger numbers last month, despite travel chaos caused by the snow and ice. The number of seats flown, regardless of whether passengers turned up, increased to 3.6 million.

Andrew Lobbenberg, an analyst at RBS, said passenger numbers were higher than expected and better than those of rival Ryanair. EasyJet’s UK bases at Gatwick and in Europe coped better with the snow than other airports such as Heathrow, which reported a 9.5% drop in passenger numbers, he added.

The airline’s chief executive Carolyn McCall – appointed last summer – has already achieved success early in her tenure. As well as the resilient recent trading, she has also overseen a resolution of the dispute with founder Sir Stelios Haji-Ioannou, who stepped down from the board in May.

Sir Stelios, who owns the rights to the ‘easy’ brand name and owns a 38% stake in easyJet with the rest of his family, agreed to allow the airline to carry on using its name in return for receiving 0.25% of the airline’s annual revenues.

EasyJet recently revealed that pre-tax profits nearly trebled to £154 million in the year to September 30 – an increase of £99.3 million. The profits lift was achieved despite disruption caused by the Icelandic ash cloud and snowy weather at the start of 2010.

The “no frills” airline currently has 193 planes and aims to increase this to 220 by the end of September 2013. It ordered 15 more Airbus A320 planes earlier this month and switched a deal for the delivery of 20 A319 aircraft to larger A320s to increase passenger capacity.

Meanwhile, in the retail sector, Primark-owner Associated British Foods (ABF) was one of the FTSE 100 Index’s success stories in 2010 and investors will be hoping its first quarter update on Thursday will start 2011 in the same vein. The company, which also makes Twinings tea, Kingsmill bread, Silver Spoon sugar and the Patak’s spicy food range, saw its share price rocket 44% in 2010, making it one of the Footsie’s top 10 performing companies.

Sales increased by 10% in the year to September 18, breaking through the £10 billion barrier for the first time and adjusted pre-tax profits increased 26% to £825 million. Value clothing retailer Primark, which has performed well in the recession, last year reported sales up 18% to £2.7 billion and operating profits up 35% to £341 million.

But the soaring cost of commodity prices threatens to make life difficult in 2011. Cotton, which nearly doubled in price in the past year, will put Primark under pressure to put up prices or take a hit to its profit margins. Analysts at Panmure Gordon predicted Primark’s margin will be squeezed from 12.5% to 11.7% in 2011, undoing some of the increases in its profitability over the past year.

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