EasyJet warns of turbulent summer after Brexit vote and terror attacks
EasyJet said it was facing the most difficult summer holiday season for years as it laid bare the impact from the Brexit-hit pound and warned over consumer confidence after political turmoil in Turkey and recent terrorist attacks.
The low-cost carrier said it has been forced to slash fares, which are down by more than 5% year on year, to boost demand, while costs have surged after the pound has fallen around 10% since the UK's decision to leave the EU.
Boss Carolyn McCall said the group was battling against the toughest period in her tenure at the helm, following two months of turbulence and the EU referendum.
She said the pound's plunge after the Brexit vote had seen a £40 million currency swing against the group, while holidaymaker confidence has also been impacted by sterling's weakness as well as last week's massacre in Nice and the attempted coup in popular sun-seeker destination Turkey.
The group said revenues dropped 2.6% to £1.2 billion in its third quarter, after being knocked by traffic control strikes, runway closures at Gatwick Airport and severe weather.
Shares dropped 6% after the gloomy update.
EasyJet has seen its stock tumble after warning last month that it would take a £28 million hit to profits following two months of turbulence and cautioning that Brexit would have a negative impact on the airline.
The group is also drawing up plans to potentially move its legal headquarters out of the UK and into Europe if the Government cannot negotiate to retain the status quo in the aviation market, which allows operators to fly across the continent in a deregulated environment.
Ms McCall said it was the most challenging trading in her time in charge and "for airlines, one of the most difficult periods we have seen in a long time".
She said the group has also been forced to promote flights in June and July - normally in high demand in peak season trading.
There have been 11 strikes in June alone, with a "significant number of cancellations" due to disruption, to add to the wider challenges impacting the sector.
"More recently, currency volatility as a result of the UK's referendum decision to leave the EU as well as the recent events in Turkey and Nice continue to impact consumer confidence," Ms McCall added.
Revenue per passenger seat on a constant currency basis fell 8.3% in the third quarter, the airline said.
The carrier said it had sold about 65% of seats available in its final quarter to the end of September, with per-seat revenue falling 7.5% at a constant currency basis.
EasyJet declined to give guidance on its full-year profits, but cautioned that "as a result of events in the last week, the revenue per seat trajectory in the fourth quarter remains uncertain".
EasyJet said average fares were £60.69, against £64.15 a year earlier.
Despite the woes in the industry after the Brexit vote, easyJet said it remains committed to growing in the UK and does not plan to cut capacity.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: " The airline sector looks set for a pretty unpleasant ride in the short term."
He added: " EasyJet puts the free movement of EU citizens into practice on a daily basis, which makes the possibility of losing access to European air space a real problem.
"However, while Brexit presents a long-term challenge for the business, near-term hurdles are proving just as challenging."
He said easyJet had been able to offset lower revenues per seat with rising passenger numbers, up 5.8% to 20.2 million in the three months to the end of June.
Its load factor - a measure of how well it fills its planes - also rose, to 92% from 91.7% a year earlier.