Shares in Easyjet have taken a 7 per cent hit sending it crashing to the bottom of the FTSE 100 index after a "horrible" April in which hundreds of flights were cancelled.
Chief executive Carolyn McCall said strikes by air traffic control staff in France had seen 600 flights cancelled, blowing a £25 million hole in pre-tax profits this year. Threatened strikes also hit bookings.
The warning completely overshadowed a £7 million pre-tax profit in the six months to March - the first since 2002 in its traditionally weaker half. Shares dropped 134p to 1698.5p or 7%, slashing around £540 million from the market value of the company.
McCall placed heavy emphasis on the strikes, but also acknowledged a “cooling off” in bookings after suicidal pilot Andreas Lubitz crashed a Germanwings plane on March 24, killing himself and 150 passengers.
French air traffic controllers called strikes off on March 26 and 27 because of the tragedy but took action on April 8 and 9, affecting “two-thirds of our flying” according to McCall. They also threatened action on April 16-18 and early May.
“They called off all of these strikes but the fact is that a lot of passengers just didn’t book in April. The market is saying today is that the £25 million hit to our bottom line has to be taken into account in our full year result. It’s a short-term thing,” she added.
She added that it was “very hard to be tangible in the same way” about the impact of Germanwings although she acknowledged a “cooling off” in bookings. “When you see any tragic event, you see a reaction to that from consumers and that is what happened.”
The airline has benefited from cheaper fuel costs, cutting its fuel bill by up to £120 million in the year to September. But easyJet also flagged up a £40 million hit in the second half from a stronger pound, depleting euro-denominated revenues. Revenues per seat will be down around 4 percentage points in the current quarter, the firm added.
EasyJey is looking to drive savings by increasing the number of seats on its A320 aircraft from 180 to 186 from next year. But McCall added that the reconfiguration of its aircraft would provide passengers with “more personal space” and the average seat pitch - the distance between rows - would remain exactly the same. Panmure Gordon analyst Gert Zonneveld said the outlook was “a little disappointing”.Reuse content