EasyJet Explains Losses

Terror attacks in Sharm el Sheikh, Paris and Brussels, combined with a sliding pound, pushed easyJet into the red in the first half of the year.

The airline today announced a £24 million pre-tax loss for the six months to the end of March, compared with a £7 million profit for the same period of the previous year.

Revenue per seat fell by 6.6% to £51.29 and total costs per seat, including fuel, fell 5% to £51.98.

During the winter, the airline suffered an adverse foreign exchange impact of £33 million. If sterling had remained strong, it would have made a profit of £5 million.

Chief executive Carolyn McCall remained bullish in the face of the first-half loss, saying: "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 H1.

"Consumers have enjoyed lower fares, which have decreased by 6% year-on-year, the second successive year of falling fares, as the benefits of lower fuel costs are passed on to passengers. Active cost control by the airline has helped maintain margins.

"This performance is a clear demonstration of the strengths of easyJet's unique combination of Europe's leading network coupled with friendly service, low fares, and digital and data leadership.

"We are confident that over the full year we will again grow passenger numbers, revenue and profit. As a result of easyJet balance sheet and the Boards confidence in the future success of the business, the annual dividend payout ratio will increase by a quarter to 50% subject to AGM approval."

Forward bookings are in line with last year but, taking into account the early Easter and the effects of terrorism in Brussels, easyJet expects third-quarter revenue per seat to decline by around seven percentage points.

It said revenue per seat at constant currency for the second half of the financial year will decrease by low to mid-single digit percentage points.

Cost per seat at constant currency including fuel is expected to decrease by around 5% for the full year.

The airline is expecting to make a further saving on its fuel bill of between £85 million and £90 million for the second half of the financial year, compared to the six months to September 2015, but currency exchange rate movements are likely to cost the airline an additional £20 million.