EasyJet profits plunge despite soaring passenger numbers

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EasyJet profits plunge despite soaring passenger numbers

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Author Felicity Anderson

EasyJet announced this week that its profits fell 17% this year, despite surging passenger numbers that hit a record high.

The UK’s biggest budget airline reportedly flew 80.2 million people in 2016-17, which is almost 10% more than the previous period.

Fuller planes, however, were not enough to protect its profits with, “more than £100m lost due to the slump in the pound after the Brexit vote,” reports the Guardian.

According to the newspaper, profits before tax fell from £494m to £408m as the airline reduced its fares to fill seats, in what the chief executive, Carolyn McCall, called “a difficult year for the aviation industry,”.

McCall said:

“Our planned approach of achieving number one or two positions at Europe’s leading airports, friendly and efficient customer service and a continuous focus on sustainable cost control, has put easyJet at a strategic advantage during a period when there have been bankruptcies and some airlines have struggled operationally.”

“A difficult year for the aviation industry”

EasyJet cites the fallout from the Brexit vote and the “adverse headline currency impact” of £101m as the main reason for the dip in profits according to the BBC.

“We are hedged on currency, but the devaluation was quite significant on 24 June 2016,” McCall told the BBC’s Today programme, adding, “we started the year knowing exactly that, there was no surprise there for the market.”

She said that the airline was healthy, despite the industry having had “a couple of years where it was a very tough market”.

EasyJet

Increased opportunities for EasyJet

Other airlines in the low-cost sector, however, have not fared as well as EasyJet, providing a blow to the industry but also increased opportunities for the no-frills airline across many of its major routes, where it has been able to absorb more fares.

Ryanair was recently forced to cancel thousands of flights over autumn/winter after miscalculating pilots annual leave, and the recent collapse of Monarch Airlines has also added to enhanced demand for EasyJet flights.

“Positive momentum”

Further capitalising on the plight of other low-cost airlines, in October, EasyJet announced an agreement to acquire part of bankrupt Air Berlin’s operations at Berlin Tegel airport for €40m reports the BBC.

The deal is expected to be complete next month and will see the airline lease up to 25 A320 aircraft, and offer employment to up to 1,000 former Air Berlin crews.

The airline claims that operations at Berlin’s Tegel airport would result in a loss of around £60m in 2018, with one off-costs of around £100m but it would reverse the fortunes of the loss-making operation and turn a profit by 2019.

McCall is set to leave the airline in January and will move to broadcaster ITV after spending 7 years heading up EasyJet.

Referring to this week’s figures she has said there was “positive momentum” at EasyJet, including rising ancillary revenues, driven by high sales on the mobile app, as well better inflight brands, reports, the BBC.

She said she was proud to have increased customer loyalty at easyJet during her seven years in charge.

 “Our customers don’t see the low-cost model – we have got enormous loyalty from passengers, 60 million last year were repeat customers. That’s testimony to our crew and people.”

By | 2018-05-30T10:08:05+00:00 November 23rd, 2017|Business|0 Comments

About the Author:

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Felicity is a passionate advocate of simple living. Based in Scotland she was once a crime reporter, before moving on to obtain her degree in History. Felicity now focuses on business and financial journalism.

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