EasyJet says demand for travel is lower after Paris attacks
EasyJet has warned that revenues could continue to be impacted by weak travel demand following the terrorist attacks in Paris and the bombing of a Russian passenger jet in Egypt.
The British low-cost airline on Tuesday said the Paris attacks in November resulted in a drop-off in demand in the three months to December 31, offsetting a strong performance in October.
While forward bookings for the second quarter are showing a “marked improvement” compared with November and December, easyJet said it expected revenue per seat to decline by mid-single digits because of the continuing impact of Egypt and Paris.
The warning sent shares in Europe’s second-largest low-cost airline down as much as 4.3 per cent, with trading down 2.70 per cent at 1,587p by mid-morning.
EasyJet reported a 3.7 per cent decline in revenue per seat, on a constant currency basis, in the first quarter. The airline said 2 per cent of that was down to the attacks in Paris, while 1.5 per cent resulted from the cancellation of flights to Sharm el-Sheikh over concerns that a bomb caused the crash of Russia’s Metrojet.
“The company has given a disappointing revenue outlook, with Paris/Egypt booking effect expected to continue through Q2, to the extent that unit revenues could actually worsen sequentially this quarter,” said Oliver Sleath, analyst at Barclays.
However, easyJet said a lower fuel bill and a tighter focus on costs will enable it to meet market forecasts for full-year pre-tax profit of £738m, up from its record profit of £686m achieved in 2015.
Carolyn McCall, chief executive at easyJet, said the airline will consolidate its low-fare strategy with a “relentless focus on cost reduction which is already delivering”. She added: “This will ensure that easyJet continues to win and continues to increase revenue, profit and dividends.”
Cost per seat excluding fuel, at constant currency, is expected to be between flat and a 1 per cent increase for the full year, compared with its previous estimate of a 2 per cent rise. It expects to save between £75m and £85m in fuel costs in the first half of the year.
Overall the low-cost airline saw a 8.1 per cent growth in the number of passengers carried to 16.1m in the first quarter, with load factor increasing by 0.6 percentage points to 90.3 per cent.
It comes after most European airlines reported strong summer profits, following buoyant demand and low fuel prices. Even legacy carriers such as Lufthansa and Air France-KLM that have been hit by strikes have posted better than expected results thanks to strong summer bookings.