EasyJet posts £24m loss as terror attacks deter passengers
Low-cost carrier easyJet has swung to a half-year loss after recent terror attacks saw some passengers stay away and rivals stepped up the pace of competition.
The no-frills airline posted losses of £24 million for the six months to the end of March against profits of £7 million a year earlier, but said its bottom line was hit by a £33 million foreign exchange rate impact.
It said sales suffered in the wake of November's deadly attacks in Paris, which knocked 2.7% off revenues per seat in the first half, while the suspension of flights on routes to the popular Egyptian tourist destination of Sharm el-Sheikh following the Russian airliner crash reduced revenues by another 1.3%, it said.
Half-year revenues per seat were left 6.6% lower overall at £51.29 and easyJet warned that trading would remain tough in its third quarter as demand continues to be impacted by the terrorist bombing at Brussels airport in March, which killed 16 people.
It said the decline in revenues per seat would worsen, to a fall of around 7%, with the early timing of Easter also taking its toll in the third quarter.
The group is likewise battling against increased competition from rivals such as Ryanair, with the sharp falls in the price of oil seeing a surge in low-cost travel as fares fall across the board.
But the group said it was a robust performance against difficult conditions, with consumers remaining "resilient".
"Demand for air travel continues to grow, despite recent disruptive events," it said.
On an underlying basis and with the foreign exchange hit stripped out , easyJet posted interim pre-tax profits of £5 million.
Airlines often register a loss in the traditionally weaker winter period, and easyJet's £7 million profit a year ago was a rare first-half result.
The group said lower fuel costs brought costs down significantly in the first half, but added this was offset by the impact of the terror attacks.
It offered some cheer to holidaymakers, as it said air fares would remain low over the summer, having fallen by 6% year-on-year in the first half.
The group said it had seen its "best ever" ski season, while sunseekers also gave it a boost, with total half-year revenues up 0.3% to £1.8 billion.
Carolyn McCall, chief executive of easyJet, said: "EasyJet has delivered a robust financial performance during the half year despite the well-publicised external events.
"Underlying consumer demand has been strong with UK beach traffic providing a healthy start to the half and easyJet's biggest ever ski season helping to deliver increased passenger numbers and higher revenue during the first half."
It said its load factor - an industry measure of the percentage of seats that were actually occupied - remained stable at 89.7% and confirmed forward bookings were in line with a year earlier.
Shares in easyJet rose more than 2% as it shrugged off the first half losses, with the stock buoyed by easyJet's pledge to raise shareholder dividend payouts.
Ms McCall said: "We are confident that over the full year we will again grow passenger numbers, revenue and profit."
Joe Rundle, head of trading at ETX Capital, said: "EasyJet is making a bullish bet on its future by raising the dividend, judging that passenger numbers will continue to rise even while it acknowledges the knock the sector is taking from recent terror attacks."
He added: "But easyJet may be staking a lot on Britain remaining in the EU - the newly business travel-friendly airline could take a severe hit if the UK votes to leave and cross-border trade suffers."