The Week Ahead: Updates due from International Airlines Group, easyJet and Merlin Entertainments
- Credit: PA
The City will this week study the effect of the Paris and Egypt terror attacks on November passenger traffic at British Airways and easyJet, and will assess the recovery of Merlin Entertainments since the summer rollercoaster crash at its Alton Towers theme park.
British Airways owner International Airlines Group and budget carrier easyJet will reveal the impact of terror attacks in Egypt and Paris when they post their latest passenger traffic numbers on Thursday and Friday respectively.
The airlines will reveal their November numbers, with both carriers having cancelled all flights between the Egyptian resort of Sharm el-Sheikh and the UK until January following the suspected bombing of a Russian passenger jet.
Flights were halted after the UK government said the plane crash in the Sinai desert, which killed 224 people at the end of October, may have been caused by a bomb.
International Airlines Group (IAG) last month upgraded its annual profit guidance after growing passenger numbers and lower fuel costs led to strong third quarter results.
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IAG, which in August added Ireland’s Aer Lingus to its stable of airlines for 1.4billion euros (£1bn), said its full-year operating profit would range from 2.25bn euros (£1.6bn) and 2.3bn euros (£1.7bn), having previously forecast 2.2bn euros (£1.6bn).
The group said that, excluding Aer Lingus, it posted a third-quarter operating profit of 1.21bn euros (£869million), beating analysts forecasts of 1.19bn euros (£855m).
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The group, which also includes Iberia and Vueling airlines, said in its third quarter to the end of September passenger unit revenue lifted by 6.5% and fuel costs fell by 8.6%, compared to a year ago.
The price of crude oil has fallen by more than half since last summer to around 49 US dollars (£32) a barrel due to a production glut, cutting costs of heavy users such as airlines.
Earlier this month easyJet said it believed the Paris terror attacks, which killed 130 people, would have a minimal impact as passengers would still want to travel. Communications director Paul Moore added that any disruption would be brief and the airline had not changed its growth forecasts for 2016.
“Obviously our thoughts are with those affected,” he said. “But we have dealt with such events before and it is typically a short-term impact. Both in and out of Paris, people will continue to want to fly.”
The budget airline posted strong pre-tax profits of £681m for the 12 months to the end of September earlier this month, in line with its upgraded guidance. This is up £105m on last year and represents the fifth straight year of record profits.
The firm also carried an additional four million passengers during the year, hitting a total of 68.6m travellers.
Alton Towers owner Merlin Entertainments will update the market on its trading tomorrow as it continues to count the cost of its major rollercoaster accident earlier this year.
Last week, the group said the crash of its Smiler ride in June was caused by human error as staff misunderstood a shutdown message and wrongly restarted the rollercoaster.
Five people were seriously injured in the crash, which resulted in the 500-acre theme park in Staffordshire being shut down for four days.
Analysts at Jefferies said trading at the group, which also owns attractions such as Thorpe Park and Legoland, may also be impacted by the weak euro which has hampered tourism in the UK.
The broker added it did not expect much of a boost from Halloween period as Merlin management had forecast earlier.
Earlier this month the firm said that up to 190 jobs could go at Alton Towers after sales plunged following the crash. It said: “At the end of a very difficult year, Alton Towers Resort has confirmed a proposed restructure of the business to be completed in time for the opening of the new season in March 2016. Regretfully however, it may result in the loss of up to 190 salaried jobs across the resort.”
In September, the company first revealed the impact the crash has had on the business as visitor numbers plunged at its theme parks over the peak summer season.It said it saw like-for-live revenues tumble by 11.4% across its theme park division over the first nine months of its financial year after seeing “significantl” lower numbers of visitors to Alton Towers, while other UK attractions in the unit, such as Thorpe Park, were also hit.
It warned that annual theme park earnings would be at the lower end of expectations and would probably continue to be impacted over 2016 in the wake of the accident.
However, the popularity of its Legoland resorts helped shore up wider group trading, with overall like-for-like sales edging 0.3% higher in the 36 weeks to September 5.
Merlin has already warned over profits in the theme park business, saying in July that earnings would be between £40m to £50m, down from £87m in 2014.