ii view: easyJet more popular than ever

Self-help initiatives, going green and launching a holiday business has investors rushing to check-in.

Full-year results to 30 September 2019

• Revenue up 8.3% to £6.39 billion
• Passenger numbers up 8.6% to 96.1 million
• Total revenue per seat down 2.7% at constant currency
• Headline cost per seat down 1.5% to £56.74
• Headline cost per seat excluding fuel at constant currency up 0.8% to £43.11
• Dividend down 25% to 43.9p per share

Chief executive Johan Lundgren said:

"easyJet finished the 2019 financial year with a strong performance across the business and a record summer.  More customers than ever are coming to easyJet as their airline of choice, with a record 96.1 million customers flying with us this year.  Our self-help initiatives meant we have been able reduce costs and drive a better yield performance which has improved revenue per seat in the second half of the year.  

"I am really thrilled that with the launch, before Christmas, of our brand new easyJet Holidays business we are bringing flexibility and excellent value to the holiday market.  

"And finally I am proud that we have announced that from today we will be the world's first major airline to operate net-zero carbon flights across our whole network.  We are doing this by offsetting the carbon emissions from the fuel used for all of our flights."

ii round-up:

Launched in 1995 and floated on the London Stock Exchange in 2000, short-haul European airline easyJet (LSE:EZJ) now flies over 90 million passengers annually. 

It operates over 300 airbus aircraft with around 70% owned and the rest leased. 

Its five key priorities are to be number one or number two in primary airports, winning customer loyalty, offering value by efficiency, employing the right people and innovating with data. 

For a round-up of these full-year results, please click here.

ii view:

Many factors outside of management's control, such as fuel costs and the weather, can hinder financial performance. Company action to try and mitigate such factors is a feature across the industry. 

Over-supply or capacity issues in several of its markets continue to make for a highly competitive environment. Its founding low-cost business model has arguably given it first mover advantage, with some rivals having already failed and others potentially not surviving longer term. 

The launch of a holiday business offers opportunity. Around 20 million customers per year fly with easyJet to Europe's largest leisure destinations, but only 0.5 million book accommodation with it.

For investors, and despite a reduction in the dividend payment, an estimated forward yield of over 3% still offers attraction in the current ultra-low interest rate environment. But with the one-year forward price/earnings (PE) ratio currently above both the three and 10-year averages, it would not come as a surprise to see some a levelling off in the share price, or at least some decrease in the pace of growth.

Positives: 

• Record passenger numbers 
• Upgrading its aircraft fleet is expected to deliver a cost per seat saving of up to 20%
• Became the largest short haul operator to Berlin in 2017

Negatives:

• Many factors outside of management's control can impact performance
• Despite group preparations, Brexit provides uncertainty
• Climate change requirements could see fuel taxes introduced/increased

The average rating of stock market analysts:

Hold