EasyJet sees share price dip despite rise in passengers

Published on Monday 6 October 2008 21:44

EASYJET, the low-fares carrier, booked a sharp rise in passenger numbers yesterday but growing concerns about the economy buffeted shares across the sector.

During September, Luton-based EasyJet carried 4.2 million passengers, a 22.1 per cent increase on a year earlier.

At 86.9 per cent, the airline's load factor – a measure of how full its planes are – was almost two percentage points higher than in September 2007.

The strong performance echoed an equally positive result from larger rival Ryanair, which said on Friday its September passenger numbers grew by a fifth.

However, both airlines have warned of slowing consumer demand over the winter months.

Shares in EasyJet closed 7 per cent lower at 305p.

Meanwhile, British Airways tumbled 12.3 per cent to 145p amid concern that the deepening financial market turmoil would curb demand for air travel. BA said on Friday that premium class travel was 8.6 per cent lower in September, with passenger numbers down by 5.6 per cent overall.

EasyJet, whose shares are down by nearly 50 per cent for the year so far, said its year-to-date passenger growth was running at 17.3 per cent as the group benefits from its acquisition of GB Airways from British Airways, as well as promotions and sales.

The carrier undertook heavy promotional activity in the early summer months, with up to 20 per cent off two million seats – a strategy aimed at boosting traffic in the autumn.

It also plans partially to offset higher fuel bills through revenues growth and cost savings and has vowed to be "relentless" in addressing costs and efficiency.

While EasyJet did not provide any comment on its trading performance in September, it did warn recently that full-year profits could be as much as 42 per cent lower than last year.

Douglas McNeill, a transport analyst at Blue Oar Securities, said: "The outlook is uncertain – consumer weakness is going to be a factor for some time."

Collins Stewart analyst Andrew Fitchie said in a note that BA and the budget carriers were operating opposite models – with the former pushing up prices at the expense of volume and the latter keeping fares low, helping to explain the sharp contrast in September performance.

BA said on Friday that its forward bookings were being affected "by the increased anxiety in financial markets and by the uncertain economic outlook".