EasyJet threw down the gauntlet to arch-rival Ryanair today, declaring that its profits will grow 20% over the next year on top of the 50% increase in earnings it has posted for the last 12 months. (11/21/2007)
That compares with Ryanair´s own estimated profit growth of about 17% as it expects to have to ramp up its ticket giveaways this winter to keep passengers flying.
Increasing ancillary revenues such as charging passengers extra for speedier boarding and persuading them to book hotels when they are booking their tickets, helped easyJet to record pre-tax profits of Ł201 million in the year to the end of September, up from Ł129 million last time. A 6% cut in costs, mainly from running a fleet of more efficient younger aircraft from its new orders of 150-seater Airbuses, also helped offset soaring oil prices.
But it is on revenue forecasts that easyJet is trumpeting it will outperform Ryanair.
The Irish budget airline has warned its yields - the key air fares performance indicator showing revenues per passenger - will be down by 5% over the winter, traditionally the toughest season for the airlines.
However, easyJet said today it expected its yields to be flat over the coming months and start growing again next summer when the airline will be able to start pushing up prices in comparison to the spring and summer of 2007 when Gordon Brown´s air passenger duty rise prevented any air-fare inflation.
EasyJet chief executive Andy Harrison said that yield improvement on top of an expected 15% growth in its network in Europe will produce underlying pre-tax profits in the current financial year up 20% or stripping out exceptionals, a figure of Ł230 million - fast gaining on the Ł330 million Ryanair expects to make.
"These are best-ever results, and we expect more to come," said Harrison.
