Ryanair feels turbulence as EasyJet issues profit alert
UK airline EasyJet expects to shoulder a £90m (€102m) currency hit in its latest financial year following the slump in sterling since June's Brexit vote. That's £35m worse than since the day of the referendum.
The airline also expects its pre-tax profit in the financial year that just ended in September to be as much as 29pc below the £686m it made in the previous financial year.
It said its profit in the period just ended will probably be between a range of £490m to £495m. That's up to 3.8pc lower than had been anticipated by Davy Stockbrokers.
"We have been disproportionately affected by extraordinary events this year but our excellent network, cost control and revenue initiatives and our strong balance sheet underpin our confidence in the business," said chief executive Carolyn McCall.
The airline will formally release its financial results for the 12 months ended in September, next month.
EasyJet's trading update dragged shares in other airlines including Ryanair lower. EasyJet's owns shares fell as much as 7pc.
Shares in Ryanair, which sees about one-third of its annual 116 million passengers fly in and out of the UK, were down over 2pc at one stage before recovering slightly later.
EasyJet said that its passenger numbers for the three months to the end of September were a record 22 million, with a strong load factor of 93.9pc. The load factor represents the number of available seats that it filled.
It added that revenue per seat fell 8.7pc in the period compared to a year earlier, as flyers benefited from cheaper tickets.
The airline said it had "performed strongly" in a difficult operating environment for all European airlines.
It said that it had been hit by exchange rate fluctuations impacting holiday travel costs, dented demand because of terrorist attacks, and the low fuel cost resulting in increased market capacity.
Airlines pay for fuel in US dollars, making it more expensive for carriers that work with pounds or euro.
But the price of fuel has declined, and even with the currency hit, EasyJet said its fuel bill in second half of the year that ended on September 30 will be between £75m and £80m lower than in the second half of the previous financial year.
EasyJet also pays huge chunks of its landing fees and air traffic control fees in euro, making those services more expensive.
The airline insisted that it continues to see the current market environment as an "opportunity to build and strengthen its strategic position for the long term".
"The current environment is tough for all airlines, but history shows that at times like this the strongest airlines become stronger," said Ms McCall.