Sunday 23 July 2017

EasyJet profit falls as currency and security woes take toll

EasyJet chief executive Carolyn McCall
EasyJet chief executive Carolyn McCall

Low-cost airline easyJet reported its first fall in annual profit in six years on Tuesday as security woes and currency fluctuations took their toll and forecast more declines in ticket prices this year.

Europe's second biggest no-frills airline behind Ryanair has been punished by its exposure to Egypt, Turkey and the French cities of Paris and Nice, which have all suffered attacks by militants, as well as the slide in the pound since Britain voted to leave the European Union in June.

The airline said it expected ticket revenues per seat to fall about 5-9pc in 2017 following a 6pc drop in the 12 months to the end of September.

The carrier also said it would incur costs of about 10 million pounds to set up an operating licence in another EU member state to protect its rights to fly between and within the bloc, which makes up a third of its network. About half of the cost will be booked in the current financial year, it said.

Sterling has fallen by about 14pc against the euro and 16pc against the dollar since the Brexit vote, prompting other carriers serving the British market such as Ryanair and British-Airways owner IAG (ICAG.L) to lower profit expectations.

EasyJet posted a 28pc drop in annual pretax profit to 495 million pounds ($618 million), the first decline since 2009 but at the upper end of a 490 million pound to 495 million pound forecast range it gave in October.

The fall in sterling following the Brexit vote resulted in an 88 million pound hit to EasyJet's annual profit and the carrier said it expected a further impact of 90 million in the 12 months to September 2017.

The carrier said that while its cost per seat excluding fuel was expected to rise 1pc this year, it was sticking to a target of keeping costs in 2019 flat when compared with 2015.

Reuters

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