EasyJet profits plunge
EasyJet predicted a further fall in seat revenues next year as it announced its annual profit had shrunk for the first time in six years.
The airline posted a 28% fall in pre-tax profits to £495 million for the 12 months to the end of September.
It said revenues had been hit by the fall in sterling following the UK’s vote to leave the European Union, which wiped £88 million from its profits, and terror attacks in Egypt, Turkey, Paris and Nice.
The carrier said it expected revenues per seat to fall 5% to 9% in 2017 following a 6% drop in the past 12 months.
Announcing its results, easyJet also confirmed that it was planning to set up an operating licence in another EU member country so that it will be able to continue to fly between and within the EU post-Brexit.
It said the move will cost it about £10 million, half of which will be spent in the current financial year.
Despite the drop in pre-tax profits, market analyst Joshua Raymond of XTB.com descried it as a ‘fairly resilient performance’ in the face of external events.
"These unprecedented events are predicted to have cost the firm £150m in lost profits whilst foreign exchange moves has also cost seen a negative impact of £88m," he said.
"The firm also expects a further £70 million headwind to its first half year performance for 2017 thanks to the weaker pound. This is why the firm must continue to focus on its lean strategy, maintaining a tight grip on costs per seat, swelling its load capacity and a bit of luck in the unprecedented events such as terrorism or major flight disruption, if is to return to significant profit growth."
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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