easyJet Says Weak Currency To Hit Profit

UK airline easyJet announced a quarterly revenue increase and lower seat costs, but said its current full-year profit will be down by GBP£105 million (USD$131.5 million) as a result of the weak pound.

The deterioration is worse than the £90 million easyJet announced in November.

In the first quarter to end December, 2016, easyJet saw a revenue increase of 7.2 percent to £997 million. Headline cost per seat was down 7.9 percent at £55.21, from the previous year.

The low cost carrier flew 8.2 percent more passengers in the quarter on an 8.6 percent capacity increase. Load factor was 0.3 percentage points down at 90 percent.

Chief executive Carolyn McCall said “easyJet has delivered a solid first quarter with revenue, cost and passenger numbers in line with expectations. This is despite a tough pricing and operating environment.”

Looking forward, easyJet said in a statement that “the pricing and operating environment remains tough with fuel prices remaining low and continued strong growth in European short haul capacity impacting yields across the industry.”

Major competitor Ryanair has also cut its profit forecast, but easyJet is particularly exposed to the currency drop as more of its revenue is in pounds.

easyJet said it would be applying for an Air Operator Certificate (AOC) in another EU member state to secure flying rights after the UK leaves the European Union.

The airline said the one-off cost would be £10 million over two years, mainly due to re-registering aircraft in the new jurisdiction.