EasyJet takes £100m hit but earnings avoid turbulence

Analysts think the airline could benefit from recent Ryanair woes. Picture: Contributed
Analysts think the airline could benefit from recent Ryanair woes. Picture: Contributed
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EasyJet profits are poised to come in at the top end of the airline’s forecasts after a record quarter, but the group will take a £100 million hit from the Brexit-induced slump in the pound.

The budget carrier said it transported 24.1 million passengers in the three months to 30 September as travellers lapped up low summer fares to beach destinations.

As a result, the group said full-year pre-tax profits are expected to come in between £405 million and £410m, the upper end of its previously guided range.

However, the range is still shy of last year’s £495m profit, with the firm booking a £100m hit from the plunging pound.

Chief executive Carolyn McCall, who will leave the firm to take the top job at ITV in January, said: “EasyJet has finished the 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. The market continues to be challenging and EasyJet has had to absorb a significant currency impact of £100m in the year.”

The airline has been helped in recent weeks by a shambolic showing from rival Ryanair, which has had to cancel hundreds of flights after miscalculating pilot leave, and the collapse of fellow budget carrier Monarch.

EasyJet has also been boosted by a lower fuel bill, which is expected to decrease by between £230m and £235m compared to last year.

George Salmon, equity analyst at Hargreaves Lansdown, said: “Outgoing CEO Carolyn McCall may still describe the market as challenging, but it seems things are finally starting to look up at EasyJet.

“The demise of Alitalia, Air Berlin and Monarch has relieved some of the over-capacity issues in the sector, and while Michael O’Leary may now have extended an olive branch to pilots in the form of better conditions and pay, the disruption at Ryanair has gifted EasyJet an opportunity.”

McCall departs with Brexit storm clouds gathering over the travel industry. The pound’s slide has meant fewer people travelling overseas and, more starkly, British airlines are at risk of being grounded unless Tory ministers strike an aviation deal with the EU before March 2019.

To mitigate the impact, EasyJet confirmed earlier this year that it has applied for a new air operator’s certificate (AOC) in Austria to allow it to continue flying in the EU after Britain’s divorce from the bloc.

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