Friday 28 October 2016

Security fears and Brexit leave easyJet facing uncertain fourth quarter

Published 21/07/2016 | 08:25

EasyJet chief executive Carolyn McCall. Photo: Bloomberg
EasyJet chief executive Carolyn McCall. Photo: Bloomberg

British airline easyJet said it could not predict the outcome for the end of the year after growing security concerns, weaker consumer confidence and currency volatility hit the group during its most profitable peak summer period.

  • Go To

easyJet, Europe's number 2 low-cost carrier behind Ryanair, failed to provide a profit guidance for the twelve months ended September 30 on Thursday, marking a departure from previous years when it has provided a profit range.

The airline said its fourth quarter performance would be affected by two events last week in two of its destinations: the truck attack in Nice, France, which killed 84 people and the failed coup attempt in Turkey.

That gave it little visibility over revenue per seat in the fourth quarter, the airline said.

Concerns around security would add to the consumer uncertainty already arising from Britain's vote to leave the EU in June, which has made going on holiday to Europe more expensive for Britons. Britain is easyJet's biggest single market.

Analysts currently expect easyJet to report pretax profit of 592 million pounds for the twelve months ended Sept. 30, which would represent a 14 percent fall on what it made the previous year.

easyJet's third quarter was impacted by a high number of cancelled flights due to strike action, runway closures and severe weather, plus the beginning of the impact of Brexit, since when the pound has slumped 9 percent against the euro.

As a result, third quarter revenue per seat fell 8.3 percent at a constant currency or 7.7 percent on a reported basis.

Rival airlines are also finding the market tough. British Airways owner IAG warned on profit in June followed by Germany's Lufthansa on Wednesday, citing greater political and economic uncertainty.

easyJet said it was focused on controlling costs and remained committed to a plan to increase its dividend.

"The easyJet team is confident in its ability to navigate the period ahead and drive long term advantage," CEO Carolyn McCall said in a statement.


Read More

Promoted articles

Editors Choice

Also in Business