Print Edition - 2017-11-22 | MONEY
EasyJet annual profit slides 30 percent
Nov 22, 2017-EasyJet’s annual net profit slumped by almost one third on strong competition and a Brexit-fuelled slump in the pound, the British no-frills airline revealed on Tuesday.
But its share price was up 5.6 percent at 1,349 pence in mid-morning deals on a positive outlook, according to analysts.
Profit after tax slumped 30 percent to £305 million ($404 million, 344 million euros) in the 12 months to September 30 compared with a year earlier, EasyJet said in an earnings statement.
The company took a hit of £101 million owing to sterling’s retreat, which made dollar-priced jet fuel more expensive. At the same time however, a relatively low oil-price environment resulted in airlines cutting ticket prices, ramping up competition across the industry and further hurting EasyJet’s bottom line. EasyJet pointed to “an aggressive pricing environment which saw (its) net ticket revenue per seat fall by 7.8 percent at constant currency”. The group added that total revenue grew eight percent to £5.05 billion in its financial year, while pre-tax profit was down 17 percent.
“EasyJet delivered a robust performance during a difficult year for the aviation industry, flying a record 80 million passengers,” said the carrier’s outgoing chief executive Carolyn McCall, who announced her upcoming departure in July.
Looking ahead, Tuesday’s earnings update provided “signs of a break in the clouds”, noted George Salmon, equity analyst at stockbroker Hargreaves Lansdown.
“Forward reservations are up on last year, and the trend for rising costs and lower prices is set to reverse in the coming months,” he added.
EasyJet is set to benefit also from the collapse last month of British short-haul carrier Monarch, as well as its recent part-purchase of bankrupt Air Berlin.
EasyJet is meanwhile among several airlines to have submitted bids for a slice of Italy’s ailing Alitalia.
It has been a tough few months for the no-frills sector, with Ryanair cancelling thousands of flights largely owing to a pilots shortage.
Published: 22-11-2017 08:21