EasyJet expects £100m foreign exchange hit on profits

EasyJet expects £100m foreign exchange hit on profits

Foreign exchange rate movements are expected to have a £100 million adverse impact easyJet’s annual profits, the budget carrier revealed in a trading update today.

The airline expects a pre-tax profit of between £405 million-£410 million in the year to September, down from £495 million for the previous 12 months but at the upper end of estimates.

EasyJet plans to increase capacity by around 6% for the financial year ending September 30, 2018 on the back of 8% growth this summer.

“Whilst revenue momentum continues to improve, we expect continued pressure on yields reflecting ongoing market capacity growth that is currently forecast to be around 5% in the first quarter,” the airline said.

Passenger carryings for the peak summer months of July to September hit a record 24.1 million with a record load factor of 95.6%, driven by low fares across the network, including beach destinations from the UK.

“EasyJet remains focused on cost and has continued to drive structural improvements, such as longer-term capacity-related deals with airports,” the airline said. “Planned investment in resilience in operations in the summer months has delivered operational improvement, particularly at Gatwick airport.”

Chief executive, Carolyn McCall, said: “EasyJet has finished the [financial] year with continued positive momentum delivering both a strong final quarter and a strong second half.

“Passenger numbers and load factor in the final quarter set new records and the second half profit was over £100 million higher than summer 2016.”

She added: “The market continues to be challenging and easyJet has had to absorb a significant currency impact of £100 million in the year.

“However, easyJet continues to operate Europe’s strongest network and the current turmoil in the sector provides easyJet with opportunities to capitalise on its strong customer proposition and grow and strengthen our positions in Europe’s leading airports still further.

“Our people have as always made a huge difference, with a customer focused approach wherever they work. This commitment and positive attitude to our passengers has resulted in passengers flying with us in greater numbers and with greater loyalty than ever before.

“Our profit before tax outlook of £405 million to £410 million represents a good performance in a rapidly evolving and consolidating market.”

Full year results are to be issued on November 21 when the airline will provide further details on its performance in the 12 months to September 30 and outlook for the 2017-18 financial year.

More:

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