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FTSE firmer as EasyJet spies break in the clouds

EasyJet, the last airline standing in a troubled sector, propels FTSE 100 higher after saying it has started to benefit from the woes of rivals.

 
FTSE firmer as EasyJet spies break in the clouds

EasyJet (EZJ) propelled the FTSE 100 higher after the budget airline flew 7% higher after saying it was starting to benefit from the problems of rivals.

With Monarch, Air Berlin and Alitalia all going bust this year and Ryanair forced to cancel thousands of flights, Easyjet has enjoyed record passenger numbers and has begun to push up prices as a result, said outgoing chief executive Carolyn McCall.

Although the annual report will not show this – with underlying profits before tax for the year to 30 September falling 17% to £408 million largely as a result of currency moves – Easyjet said it expected revenue per seat to grow by a low-to-mid single digit percentage in the last three months of the year. This is an improvement on the full-year performance in which unit revenues per seat fell 0.4% to £58.23.

‘When capacity comes out of the market, it benefits structural winners. We have taken advantage of capacity coming out,’ McCall told reporters.

McCall (pictured) is leaving Easyjet to run ITV (ITV) with Johan Lundgren, a former executive at travel group TUI (TUIT) jetting in to take over.

She added that airline’s prospects were bright. ‘You have to leave when it’s on the up, and I think that it’s very much on the up,’ Reuters reported her as saying.

George Salmon, equity analyst at Hargreaves Lansdown, commented: ‘What’s really giving the shares lift is signs of a break in the clouds ahead. Forward reservations are up on last year, and the trend for rising costs and lower prices is set to reverse in the coming months.

‘With low fuel prices locked in, investors will be hoping the new CEO is joining at an inflexion point,’ he said.

Easyjet shares, which hit £13.65 in early trading, drifted down to trade 64p or 5% higher at £13.42, helping the FTSE 100 to advance 22 points or 0.3% to 7,412.

Cousins leaving Compass

McCall is not the only boss on the move. Compass (CPG) dropped 3% to £15.44 after the catering giant said chief executive and turnaround expert Richard Cousins would step down next March and leave the group the following September.

Dominic Blakemore, the firm’s chief operating officer for Europe, will step up, the company said as it reported full-year profits had been boosted 5.6% to £1.7 billion by the weak pound.

Intertek (ITRK) added to the downward pressure and led the blue-chip fallers, sliding 4.8% to £51.45, after the testing group clouded its full-year trading statement with news that US hurricanes would knock £5 million off profits.

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