EasyJet Plc (EZJ) jumped the most in seven months after Chief Executive Officer Carolyn McCall said the carrier has sold about half its summer seats while lifting fares and that delays which hurt profit in 2010 are being eliminated.
EasyJet rose as much as 6.2 percent to 368.20 pence in London, the biggest intraday gain since Oct. 6, after the Luton, England-based carrier also said it has cut unit costs in all areas except crew pay. A pretax 153-million-pound ($250 million) loss in the fiscal first half was slightly less than forecast.
McCall, who joined from Guardian Media Group Plc in July with a pledge to improve punctuality after crew shortages caused a surge in delays, said today that yields -- a measure of ticket prices -- are gaining as EasyJet focuses more on business travel even as waning consumer confidence curbs leisure trips.
"There are signs that the new management team is starting to deliver," said Gert Zonneveld, an analyst at Panmure Gordon in London. "Summer seats have been sold at good prices and we're seeing punctuality improvements and cost reductions, which is positive, so there are reasons for optimism."
EasyJet was trading 5.2 percent higher at 364.7 pence as of 1:25 p.m. in London, boosting its market value to 1.57 billion pounds. The stock has fallen 17 percent this year, the biggest drop on the seven-member Bloomberg EMEA Airlines Index.
Business Appeal
McCall said today on a conference call that a "flexi-fare" offered via travel agents in November that allows passengers to change flights will be sold through EasyJet's website from the end of May, widening the carrier's appeal to business travelers.
The CEO also aims to boost its share of the corporate market by lifting frequencies on key routes from bases in London, Paris and Geneva. The airline reckons that 18 percent of its passengers currently travel on business.
"We've put in a lot of the stepping stones that we had to in order to build the foundations to be able to attract more business passengers," McCall said on the call. "We had to improve reliability and punctuality, and we have fixed that. We are confident about our performance there."
On-time performance averaged 81 percent in the second quarter, versus 66 percent a year earlier, the carrier said today in a statement.
The pretax loss widened from 79 million pounds a year earlier, EasyJet said, after disruption from Britain's coldest December on record and walkouts by air-traffic controllers in France and Spain forced flights to be canceled.
Kerosene Costs
Fuel expenses climbed as the oil price surged, accounting for 43 million pounds of the pretax loss. Crude is up 34 percent from a year ago, even after dropping 15 percent in the five days ending May 6, the biggest weekly decline since December 2008.
EasyJet has hedged 64 percent of its fuel needs for the six months ending September 30 at $755 a ton, and 41 percent of its needs for the financial year ending September 2012 at $909, it said on its website. Jet fuel traded at $1,009 a ton yesterday.
The net loss was 114 million pounds, compared with 59 million pounds a year earlier, the carrier said.
"The past six months has been tough, with sharply rising fuel costs combined with cautious behavior by consumers," McCall said. "The combination of fuel and air-passenger duty increases is proving harder to pass on."
EasyJet will hold its fleet size constant at 204 aircraft next winter and implement a "conservative approach" to growth, it said in a statement. Founder and No. 1 shareholder Stelios Haji-Ioannou, who fell out with McCall's predecessor over the purchase of planes, said he welcomed the new capacity plan.
"At long last the EasyJet board has recognized that by not growing the fleet beyond the current levels of just over 200 aircraft the company will make more money than by buying more," the entrepreneur in a statement. "Management now needs to sweat the business's existing assets."
To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net
To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net
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