Currency costs and terror attacks push budget airline easyJet into the red

An easyJet Boeing 737-700.

An easyJet Boeing 737-700. - Credit: Archant

Budget airline easyJet today posted a first-half loss after recent terror attacks and increased competition added to the impact of adverse exchange rate movements.

The low-cost carrier reported a loss of £24million for the six months to the end of March against profits of £7m a year earlier, but said its bottom line was hit by a £33m foreign exchange rate impact.

It said sales suffered in the wake of November’s deadly attacks in Paris, which knocked 2.7% off revenues per seat in the first half, while the suspension of flights on routes to the popular Egyptian tourist destination of Sharm el-Sheikh following the Russian airliner crash reduced revenues by another 1.3%, it said.

Half-year revenues per seat were left 6.6% lower overall at £51.29 and easyJet warned that trading would remain tough in its third quarter as demand continues to be impacted by the terrorist bombing at Brussels airport in March, which killed 16 people.

It said the decline in revenues per seat would worsen, to a fall of around 7%, with the early timing of Easter also taking its toll in the third quarter.

The group is also 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.

However, easyJet said it had still delivered a robust performance amid difficult conditions, adding: “Demand for air travel continues to grow, despite recent disruptive events.”

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On an underlying basis, and with the foreign exchange hit stripped out, easyJet posted interim pre-tax profits of £5m for the first half.

Airlines often register a loss in the traditionally weaker winter period, and easyJet’s £7m profit a year ago was a rare first-half surplus.

The group said lower fuel costs brought costs down significantly in the first half of this year, but added that this was offset by the impact of the terror attacks.

It offered some cheer to holidaymakers, as it said air fares would remain low over the summer, having fallen by 6% year-on-year in the first half.

The group said it had seen its “best ever” ski season, while sunseekers also gave it a boost, with total half-year revenues up 0.3% to £1.8 billion.

Carolyn McCall, chief executive of easyJet, said: “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 the first half.”

It said its load factor, an industry measure of the percentage of seats on its flights that were actually occupied, remained stable at 89.7% and confirmed that forward bookings were in line with a year earlier.