London: British low-cost airline easyJet said the weaker pound and higher fuel prices would hit profit more than expected this year, sending its shares as much as 8 per cent lower on Tuesday.
EasyJet, Europe’s No 2 no-frills carrier behind Ryanair, and rival airlines, have driven down fares as they add more seats to try to grow market share during what has been a period of low oil prices.
But fuel prices have started to rise — they are up to about $53 (Dh194.67) a barrel from around $30 this time last year — and the pound has fallen 17 per cent against the US dollar since June’s Brexit vote, affecting easyJet as it buys fuel in dollars.
As a result, easyJet said pretax profit for the year to September 30, 2017, would take a £105 million ($131 million; Dh479.64 million) hit, up from the £90 million hit it flagged in November.
Shares in the company were down 6.9 per cent at 1,002.5 pence by 0840 GMT, erasing gains made over the last month.
“The results were in line with expectations other than the guidance on currency and fuel which will probably drive about a 10 per cent downgrade to consensus [profit forecasts],” Numis analyst Wynn Ellis said.
Before Tuesday’s announcement, analysts had been forecasting pretax profit would fall by 16 per cent to £414 million for the 12 months to September 30.
That decline would follow a torrid 2016 for easyJet, when annual profit tumbled over a quarter, a first drop since 2009, as falling fares, a weak pound, airport strikes and congestion compounded its exposure to destinations hit by deadly attacks.
EasyJet is trying to counter declining ticket prices by cutting costs, but competition is such that it expects ticket prices to decline by a high single-digit percentage in the first half of the year, at the top end of guidance given in November.
