easyJet blames profits slump on Brexit

The slump in sterling after the EU referendum wiped over £100m from easyJet’s profits in the year to the end of September.

Britain’s biggest budget airline saw pre-tax profits fall by one-sixth to £408m, blamed on the devaluation of the pound after the Brexit vote.

Over the year, easyJet flew 80 million passengers. All but 13 seats on a typical 180-seat flight were filled, which the airline says reflects “strong network positions and customer proposition”.

With intense competition within Europe, easyJet’s average fares fell, but that was offset by increased “ancillary revenues”: fees for baggage fees and allocated seating, inflight sale and commission from car-rental, insurance and hotel firms.

The airline’s chief executive, Dame Carolyn McCall, called it “a difficult year for the aviation industry.” She made reference to the collapse of Air Berlin and Monarch and the pilot-rostering issues faced by Europe’s biggest budget airline, Ryanair, saying: “Our planned approach of achieving number one or two positions at Europe’s leading airports, friendly and efficient customer service and a continuous focus on sustainable cost control has put easyJet at a strategic advantage during a period when there have been bankruptcies and some airlines have struggled operationally.”

She told BBC Radio 4’s Today programme that Ryanair’s cancellation of 20,000 flights was proving “helpful over the winter”. But she called for certainty on a bilateral flights deal between Britain and the EU27.

The transport secretary, Chris Grayling, has indicated that the UK wants the current “open skies” deal to continue.

Neil Wilson, analyst for ETX Capital, said: “EasyJet can boast record passengers, record loads and record capacity. But lower fares, currency headwinds and higher costs mean profits are down again.

“Lower fares are still the main problem. A currency tailwind, higher ancillary revenues and better load factors were not quite enough to offset the ticket pricing pressure.”

At the end of November Dame Carolyn is leaving easyJet for the same role at ITV, with Johan Lundgren taking over as CEO.

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