EasyJet posted a first-half loss as a spate of terrorist attacks undermined demand for flights and contributed to a Europe-wide capacity glut that’s weighing on fares and wiping out gains from cheap fuel.
EasyJet swung to a pretax loss of £24 million ($35 million) from a profit of £7 million a year earlier, it said in a statement Tuesday. Analysts had expected Europe’s second-biggest discount airline to report a shortfall of £25.7 million, based on estimates collected by Bloomberg.
Luton, England-based EasyJet halted flights to Sinai after the bombing of a Russian tourist jet in October, while November’s Paris shootings and the March 22 attacks on Brussels have further weighed on sales.
Third-quarter revenue per seat may decline 7 per cent as a result of the Belgian events, it said.
Chief Executive Officer Carolyn McCall said she’ll lift dividend payments and that EasyJet’s fiscal 2016 pretax profit should be in line with analyst forecasts. As of May 9, that figure was £721 million, according to company-compiled data, down from a consensus of £738 million as of Jan. 26.
“We are confident that over the full year we will again grow passenger numbers, revenue and profit,” McCall said, while cautioning that a “more competitive trading environment” is set to continue for the medium term as fuel prices remain low.
EasyJet faces heightened competition as low-cost leader Ryanair targets more major airports, as well as from an expansion of IAG SA’s Vueling discount-arm and makeovers at the no-frills units of Deutsche Lufthansa and Air France-KLM Group.
Lufthansa, Air France-KLM and British Airways-parent IAG have all in the past two weeks posted quarterly earnings that beat estimates, while warning of weakening fares as sales fail to keep pace with summer capacity increases. Ryanair posts earnings for the year ended March 31 on May 23.
EasyJet’s numbers took a £33 million hit from currency moves. The company plans to lift investor payouts to 50 per cent of post-tax profit from 40 per cent, subject to shareholder approval.
© 2016 Bloomberg L.P
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