Pound sterling slide hits EasyJet profits

Easyjet pays for fuel in dollars, which makes it more expensive when the pound is weaker

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The Independent Online

EasyJet has warned the cost of Brexit has already hit £90m thanks to the sliding value of the pound after the July referendum.

This is more than double EasyJet’s original estimate made in July, when the company warned of a £40m currency hit.

EasyJet pays for fuel in dollars, which makes it more expensive when the pound is weaker.

The weaker pound has also affected consumer confidence in the immediate aftermath of the Brexit vote, making holidaymakers less keen to go abroad.

Pre-tax profits for the year ending on 30 September is expected to be in the range of £490m to £495m, EasyJet said in a trading update Thursday. 

This would be 28 per cent lower than the £686m pounds generated in 2015.

It’s also well below analysts’ expectations. They predicted profit before tax would be between £497m and £517m.

The company’s share price fell 6.78 per cent at the open.

Carolyn McCall, EasyJet chief executive, said the airline was facing “one of the most difficult period in years”.

“The current environment is tough for all airlines, but history shows that at times like this the strongest airlines become stronger,” she said.

Airlines are facing a slew of pressures, from terror attacks in Sharm el-Sheikh, Paris and Brussels, as well as more recent events in Nice and Turkey, which put people off travelling abroad.

Currency and consumer issues affecting Brexit add to this stress.

Still, EasyJet said it had achieved a “record” three months of trading in its final quarter.

The company flew a record 22 million passengers in the three months to 30 September.

Carolyn McCall said: “EasyJet continues to attract record numbers of passengers due to its wide range of destinations, convenient flight times and value for money fares.

“We have been disproportionately affected by extraordinary events this year but our excellent network, cost control and revenue initiatives and our strong balance sheet underpin our confidence in the business."