EasyJet today admitted that full year profits will come in at under £500 million due to a “tough” environment for all airlines.
Full year pre-tax profits are expected to be between £490 million and £495 million against £686 million in the previous 12 months.
Britain’s largest budget airline cited flight disruption, exchange rate fluctuations impacting holiday travel costs, the impact of demand from terrorist attacks and low fuel costs driving increased market capacity over the peak three months of summer.
“Significant” exchange rate movements since the Brexit vote are expected to have increased costs to the airline by £35 million since the June 23 referendum vote.
Foreign exchange rate movements are now expected to have around a £90 million adverse impact to the end of the airline’s financial year to September 30 over last year.
“The foreign exchange headwind will continue into 2017 mainly driven by weaker sterling against the US dollar affecting the cost of fuel,” the airline warned. “The total expected foreign exchange impact for the year to 30 September 2017 is around £90 million.”
However, easyJet’s fuel bill for the six months to September 30 this year is expected to drop by between £75 million and £80 million.
Passenger numbers in the three months to the end of September hit a record of 22 million but with revenue per seat declining by 8.7% year-on-year due to low fares.
September carryings rose by 5% to 6.9 million but the load factor fell by two percentage points to 91.2%.
“EasyJet remains very focused on cost and has continued to drive structural improvements, such as in maintenance and overhead costs,” the airline said in a trading update this morning.
Chief executive Carolyn McCall said: “EasyJet continues to attract record numbers of passengers due to its wide range of destinations, convenient flight times and value for money fares.
“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.
“The current environment is tough for all airlines, but history shows that at times like this the strongest airlines become stronger.
“That is why we will continue to invest for the long term success of the business, establishing even stronger market positions, delivering excellent customer service and establishing new revenue opportunities for the future.”