EasyJet sees profits nosedive by 28% in first annual fall for six years
Budget airline easyJet has seen profits nosedive by 28% in its first annual fall for six years after being hit by the plunging pound, terrorism fears and air strikes.
Chief executive Carolyn McCall said it had been a year of "significant challenges" after a combination of terror attacks across Europe, Egypt and Tunisia, air traffic control strikes in France, political turmoil in Turkey, as well as intense competition in the sector.
The group posted a 27.9% tumble in pre-tax profits to £495 million for the year to September 30, after the sharply weaker pound cost it £88 million and it suffered a blow of around £150 million from "unprecedented" events.
It is also braced for another £90 million impact from falling sterling over the financial year ahead, with £70 million of that coming in the first half alone.
But this will be partly offset by lower fuel costs, which it expects to fall by between £245 million and £275 million in its current financial year.
Ms McCall said the group had delivered a "resilient performance", with a record 73.1 million passengers carried, although revenues still fell 0.4% to £4.67 billion as it cut fares.
EasyJet was forced to slash prices in the face of competition from the likes of rival Ryanair and Ms McCall pledged to keep cutting fares over the coming year.
The firm revealed plans for a group-wide review to make easyJet a "simpler, more efficient" company and to deliver "meaningful" savings.
More details are set to come over the year ahead, but the group assured the review was not about job cuts, with the firm taking on another 900 staff ahead of expansion from 250 aircraft to more than 300.
Ms McCall said the review was a "redesign around using technology and artificial intelligence".
While Ryanair is holding back from investing in the UK amid Brexit uncertainty, easyJet said nearly half of its growth will be in the UK in 2017.
It is setting up a new operating company in mainland Europe and applying for a new licence to continue flying within the EU after Brexit.
The group said the move will "secure the flying rights of the 30% of our network that remains wholly within and between EU states, excluding the UK".
Ms McCall said easyJet's headquarters would remain in Luton.
EasyJet has bases across 11 UK airports and more than 830 routes on its network across Europe, the Middle East and North Africa.
It plans to increase its capacity by 9% in the coming year, with "double digit" growth in London and other key bases, such as Manchester, Venice, Berlin and Amsterdam.
"In a tougher operating environment strong airlines like easyJet will get stronger, and we will build on our already well-established network," Ms McCall said.
Shares in easyJet lifted 2% as its annual profits came in at the top range of expectations, despite being sharply lower than a year earlier.