EasyJet Reports Financial Impact From Terror

EasyJet (Other OTC: EJTTF - news) has reported a "fall-off in demand" following the terror attacks in Paris and Russian airliner crash in Eygpt but predicted annual profits will rise on weak fuel costs.

The carrier's first-quarter results highlighted a reduction in bookings during November and December, which easyJet blamed on the fallout from the gun and bomb attacks in the French capital and the decision to suspend flights to Sharm el Sheikh following the Russian airliner crash .

Both Paris and Sharm el Sheikh have been important destinations for easyJet.

It (Other OTC: ITGL - news) had already announced it would not resume the Egypt flights until 27 May at the earliest.

In the quarter to 31 December, the airline said revenue per seat was down by 3.7% at constant currency - with total revenue down 0.1% on the same period in the previous year at £930m.

However, easyJet said a 3.7% reduction in cost per seat helped offset the declines, with "robust management action and acceleration of the delivery of our cost improvement plans, as well as the benefit of a low fuel price" helping drive the savings.

"Forward bookings for the second quarter are showing a marked improvement in revenue per seat compared to November and December," its statement said.

"We now expect revenue per seat at constant currency to decline by mid-single digits in the second quarter, mainly due to the impact of Egypt and Paris."

Lower fares, in the wake of the terror attacks, were credited by Ryanair for a 25% jump in its passenger numbers in December.

EasyJet was unduly affected because Ryanair does not offer flights to Sharm.

It is also the second-largest airline by market share in France.

Its chief executive, Dame Carolyn McCall, said: "easyJet’s excellent customer proposition combined with low oil prices has allowed it to offer lower fares which has driven an 8% increase in passenger numbers in the first quarter.

“The easyJet customer-centric strategy of giving passengers low fares to primary airports continues to be executed well.

"This year we will consolidate that with a relentless focus on cost reduction which is already delivering.

"This will ensure that easyJet continues to win and continues to grow revenue, profit and dividends."

Easyjet predicted a 7.6% increase in 2015/16 pre-tax profits to £738m - largely aided by lower fuel costs.

It estimated a reduction of up to £180m in its annual fuel bill, as world oil prices continue to plunge.