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EasyJet income strained by Brexit, terror attacks

EasyJet Plc’s annual profit fell for the first time since 2009 as a spate of terror attacks clipped demand and the decline of the pound following Britain’s vote to quit the European Union inflated foreign-currency costs.

Pretax profit for the 12 months ended Sept. 30 is expected to have been in the range of 490 million pounds to 495 million pounds ($623 million-$630 million), Luton, England-based EasyJet said in a trading update Thursday. That’s below the 516 million-pound figure based on analyst estimates compiled by Bloomberg. It’s also about 28 percent lower than 2015’s earnings. The stock tumbled to its lowest level in more than three years.

EasyJet income strained by Brexit terror attacks mb

EasyJet

EasyJet ceased providing full-year guidance after the June 23 Brexit decision, after initially saying earnings would match a consensus analyst estimate of 738 million pounds. While the impact of the vote on demand remains tough to gauge, sterling’s slide has bloated the fuel bill, paid in dollars, as well as EasyJet’s euro-denominated costs. The stock has lost 35 percent since the referendum.

“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,” Chief Executive Officer  Carolyn McCall said in the release.

EasyJet shares dropped to as low as 913.5 pence, the lowest level since January 2013, and were down 6.2 percent at 941 pence at 8:12 a.m. in London, dropping the company’s value to 3.75 billion pounds.

Exchange-rate movements cost the airline about 90 million pounds in the year, an increase of 35 million pounds since the Brexit poll. Leisure sales have been hurt by terrorist violence spanning Nice to Turkey, with EasyJet ending flights to Sharm el-Sheikh, Egypt, entirely last November after a Russian jet was brought down by a suspected bomb.

Summer timetables were also disrupted by air traffic control strikes in France, where EasyJet is the second-largest carrier, and a glut of seats throughout European markets weighed on yields, a measure of average fares. Revenue per seat at constant currencies fell 8.7 percent in the period versus a year earlier.