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Clement weather helps budget airline easyJet's revenue take off.

LOW-COST airline easyJet reported a surge in winter revenues yesterday after it increased baggage charges and bounced back from the previous year's snow-hit performance.

The group said total revenues were up 16.7% to pounds 763m in the three months to December 31, as it raised its first-bag charge by 16.9% to pounds 4.70 per seat. Total fees and charges increased by 26.7% to pounds 5.88 per seat.

The figures were also flattered by the weak performance in the same period in 2010, which was hit by extreme weather, grounding flights and costing the group pounds 18m.

The absence of snow disruption meant easyJet was able to keep its costs down, reducing cost per seat excluding fuel by 1.6%, while it also took advantage of retrenching competitors, which cut capacity in the face of higher costs.

The carrier said it now expects to recover most of the pounds 100m increase in its first-half fuel bill, meaning interim losses will be contained between pounds 140m and pounds 160m. This compares to a loss of pounds 153m a year earlier.

Wyn Ellis, an analyst at brokers Numis, upgraded his full-year pre-tax profit forecast from pounds 193m to pounds 225m, compared to pounds 248m the previous year.

The Luton-based group said passenger numbers were up 8.1% to 12.9 million in the period, while total revenues per seat were up 9.2% to pounds 51.83.

Chief executive Carolyn Mc-Call said: "easyJet has made a strong start to the year. This is due to firm control of costs, the strength of easyJet's network, tight capacity discipline and pricing actions taken in the second half of the last financial year."

EasyJet added that non-seat revenue declined marginally as a strong performance of in-flight sales, which includes duty-free purchases, was offset by a drop in the travel insurance market.

The carrier reported a slight increase in business passengers, up 200,000 to 2.3 million in the period, despite a wider decline in the corporate travel market.

Earlier this month, after the reporting period, easyJet changed the presentation of fees and charges on its website in line with recommendations made by regulators after concerns customers were being misled. The first-quarter update gave no mention of the group's ongoing spat with its founder Sir Stelios Haji-Ioannou.

Sir Stelios wrote to Prime Minister David Cameron last week accusing easyJet's board of softening performance targets in order to make a pounds 7m share payout for executive directors more easily attainable. Sir Stelios, who founded the airline in 1995, has also reportedly written to the company's largest institutional investors to raise his concerns about aircraft acquisitions by easyJet and the group's strategy.
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:Jan 27, 2012
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