Brexit and disruption take toll on easyJet outlook

Full-year pre-tax profits at easyJet are expected to fall by a sharper-than-anticipated 28%, easyJet warned Thursday. The company’s trading update, ahead of full results in November, follows a profit warning in June prompted by economic uncertainty, excess airline capacity and air traffic disruption, which sent the company’s shares down sharply. However, Carolyn McCall, CE, insisted current tough conditions represented an opportunity for easyJet to “build and strengthen” its market position. The company said it expected full-year pre-tax profits in a range between GBP490m and GBP495m, compared with GBP686m for the year to September 30, 2015. While easyJet had not previously forecast its profit for the year, analysts had expected a figure of between GBP497m and GBP517m. A series of European airlines have been forced to issue profit warnings as they absorb the impact of terrorist incidents, air traffic control disruption and economic uncertainty at a time when airline fleets are growing rapidly. EasyJet’s exposure to some of the markets suffering most severely from terrorism and its heavy dependence on the UK, where demand has suffered following the vote to leave the EU, mean it has been disproportionately affected. EasyJet said Thursday that its cost per seat excluding fuel was likely to fall a better than expected 1.1% for the year ending 30 September 2016, after stripping out the effects of currency movements. However, the company expected the negative effect of currency movements to reduce pre-tax profits by GBP90m compared with the previous year, a GBP35m increase from its forecast in June. It expects a similar impact for 2016-17.<br/>