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FTSE firmer as EasyJet spies break in the clouds

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.

SIG (SHI) supported the ‘mid-cap’ FTSE 250 index, which gained 0.2% or 46 points, after the insulation materials manufacturer warmed investors by sticking to its full-year forecasts. In the past four months slightly better trading in Europe has offset softer conditions in the UK, it said. The shares shot up 8% or 13p to 173p.

Severfield (SFR) put some steel in to the FTSE Small Cap index, with shares in the construction materials group jumping 10% after strong half-year results and a positive analyst presentation.

The stock has been under a cloud due to concerns over Brexit and its exposure to the London office market, but Andy Douglas of Jefferies maintained his ‘buy’ rating, saying ‘there is a lot more to Severfield than meets the eye. Good progress is being made on many fronts.’

On currency markets the pound firmed to $1.3249 against the dollar after earlier dipping at news of public sector borrowing hitting £8 billion, higher than the £7.1 billion consensus forecast of economists.

Victoria Clarke of Investec said it set a gloomy tone for the chancellor ahead of tomorrow’s Budget, though the figures also showed favourable revisions which reduced the borrowing of earlier months.

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