Easyjet have predicted that the drop in the strength of the pound will take profits down significantly this year – more than expected.
The forecast came amidst “solid” trading figures in the remaining three months of 2016, with an 8.3% rise in footfall numbers, totalling 17.4 million.
But removing the effects of the movement of the pound, the company witnessed a drop in revenue per seat, down by 1.2% to £51.64.
Investors did not respond well to the news, which had a knock-on effect on company shares, which fell by 7% in early trade.
Easyjet’s chief executive, Caroline McCall, commented: “Easyjet has delivered a solid first quarter [the final three months of 2016] with revenue, cost and passenger numbers in line with expectation. This is despite tough pricing and operating environment.”
The pound has dropped by around 17% against the dollar in the wake of the Brexit vote, which took place in mid-2016. By November, Easyjet had predicted that the weakened pound would result in losses of £90m in 2017.
Preparing for Brexit
Easyjet has begun organising a presence on the European mainland aside from the UK, in preparing for the UK departure from the EU – a move which may result in the UK missing out on Europe’s internal “open sky” arrangement.
From 1994 onwards, any EU airline has had the right to fly between any two places in Europe for free – a perk that allowed companies like Easyjet and competitor Ryanair to grow to the size they are today.
Current EU flying rights may require an overhaul and to be renegotiated and the presence of the new company would mean that Easyjet could fly within the EU, instead of having to route every flight via the UK.
New set up costs for the European company are estimated at £10m
Easyjet, which is placed in the largest 100 in the UK, plans to maintain its London listing and Luton headquarters.
The company is based over 11 UK airports and operates in excess of 800 routes across Europe, the Middle East and North Africa.
Photo credit: Christian Allinger