October 3 2013

Easyjet released a pre-close statement this morning, and announced September passenger figures. After ructions in the Ryanair share price caused by its profits warning a month ago, these are a welcome relief. The orange airline confirmed that pre-tax profits for the year ended last month will be in the range £470-480m, (growth of 48-51%) against a previous guidance of £450-480m, and all other metrics were at the top of previous guidance – revenue per seat for the full year up 6% against operating costs (ex fuel) up 4%. It has sold a similar proportion of its capacity for 2013/4 as at  the same stage last year. The load factor for September was up 120bp, and pax growth 4.8% against Ryanair at 100bp and 3%.

This all makes Ryanair’s problems look largely company specific – it said a month ago “However in recent weeks we have noticed a perceptible dip in forward fares and yields into September, October and November, which is we believe due to a combination of factors.” It said it expected full year profits to be at the bottom end of its previous guidance (€570-600m), although many brokers had been expecting as much as €650m.

The Irish airline yesterday provided another object lesson in why one should avoid doing business in France, if at all possible. It was hit by a €8m fine for allegedly infringing French labour laws when it operated and then closed down a base in Marseilles. (The staff was on Irish contracts). The episode rather spotlights the lack of harmonisation of European labour laws, and why France’s protectionist stance is increasingly out on a limb.

Easyjet had similar problems a while back in rationalising its French bases, but has settled all its fines. Both airlines were initially tempted into the market by the enticing prospect of attacking the very soft underbelly of Air France. Although MO’L has promised a new touchy feely approach to his customers (at least by his standards), I somehow don’t think this will be replicated in his approach to the French judicial system!

I am very happy to be a holder of Easy (rather than Ryanair) shares......