EasyJet flies into loss, on Brussels attacks, forex hit

10th May 2016, Comments 0 comments

British no-frills airline EasyJet said Tuesday it sank into losses in the first half of its fiscal year following the Brussels attacks, and after taking a vast foreign exchange charge.

Net losses stood at £20 million ($29 million, 25 million euros) in the six months to the end of March, compared with a slender profit after tax of £5.0 million during the equivalent part of 2014/15.

The carrier also faced a pre-tax loss of £24 million in the reporting period, when it was rocked by a large £33-million hit from adverse foreign exchange moves.

On an underlying basis and with the foreign exchange hit stripped out, however, pre-tax profits stood at £5.0 million.

"EasyJet has delivered a robust financial performance during the half year despite the well-publicised external events," said Chief Executive Carolyn McCall in the results statement.

"We are confident that over the full year we will again grow passenger numbers, revenue and profit."

EasyJet's share price soared 2.72 percent to close at 1,510 pence, buoyed by a pledge to raise shareholder dividend payouts.

Many airlines post losses over the period because it covers the winter months, when demand is traditionally weak.

- Fall in fares -

The group added that future revenues would also be impacted by recent events in the Belgian capital.

"Taking into account the timing of Easter and the effects of terrorism in Brussels, EasyJet expects third quarter revenue per seat to decline by around seven percentage points," the airline added in its statement.

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

Revenue in the first half was hit also by reduced flying to Paris and Egypt following attacks there in late 2015.

The group is meanwhile battling against increased competition from rivals such as Ryanair, with the sharp falls in the price of oil seeing a surge in low-cost travel as fares fall across the board.

EasyJet described its performance as "robust" despite difficult conditions, as consumers remained "resilient".

On March 22, Brussels was hit by suicide bombings claimed by the extremist Islamic State group that targeted the city's airport and a metro station, leaving 32 people dead.

Two bombers blew themselves up at the check-in area of Brussels airport, while a third detonated his explosives at Maalbeek metro station near the EU headquarters.

International Airlines Group, owner of British Airways and Iberia, recently said it was scaling back plans to raise its flights offering because of the Brussels attacks.

"EasyJet is making a bullish bet on its future by raising the dividend, judging that passenger numbers will continue to rise even while it acknowledges the knock the sector is taking from recent terror attacks," noted ETX Capital analyst Joe Rundle.

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© 2016 AFP

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