Easyjet’s profits are set to be cut by £105 million this year due to the slump in the value of the pound since the Brexit vote last summer.
The Luton-based airline made the announcement as part of its first quarter trading update for the three months up to the end of 2016. In November, Easyjet had estimated that the pound’s deprecation would cost £90 million in 2017.
Easyjet’s shares fell by around 3.6 per cent to £9.81 on Tuesday following the release of the statement.
Despite this blow, Easyjet’s CEO Carolyn McCall said the airline had “delivered a solid first quarter with revenue, cost and passenger numbers in line with expectations”.
“This is despite a tough pricing and operating environment,” added McCall. “The weakness of sterling and the impact of fuel combined are £35 million worse than previously expected.
“But Easyjet has made good progress in reducing costs in those areas where we have more control such as engineering, maintenance, non-regulated airports and overheads.”
Easyjet saw overall passenger numbers rise by 8.2 per cent to 17.4 million during the quarter as capacity increased by 8.6 per cent to 19.3 million. Although the airline’s load factor fell slightly by 0.3 percentage points to 90 per cent. Revenue went up by 7.2 per cent to £997 million year-on-year.
As well as the impact of the pound’s decline in value, Easyjet is also going to spend an estimated £10 million over two years to establish an Air Operator Certificate (AOC) within another EU member state to “secure the flying rights of the 30 per cent of our network that remains wholly within and between EU states, excluding the UK”.
Easyjet expects to increase capacity by 9 per cent during 2017.
“Our focus has been to invest to deliver long term sustainable, profitable growth by strengthening our leading positions at Europe’s biggest and most popular airports,” says McCall.
“The underlying year-on-year revenue per seat trend continues to improve, supported by resilient demand across all our European markets. Forward bookings are ahead of last year.”