EasyJet warns of £90m annual currency hit

EasyJet (Other OTC: EJTTF - news) shares lost altitude on Thursday after it said it was expecting annual profits of up to £495m, below analysts' estimates, blaming the impact of a £90m currency hit.

In a trading update covering its full financial year to 30 September, the FTSE 100 airline said the collapse in sterling's value since the EU referendum had contributed £35m to that foreign exchange bill.

The company, which is mulling the need for a new European base in the wake of the Leave campaign's victory, said the impact of the currency movements would be partially offset by an expected fuel bill reduction of up to £80m in its second half.

Nevertheless, its pre-tax profit forecast - of between £490m and £495m - was below market expectations of more than £510m.

The company reported earnings of £686m for its previous 2015/16 financial year. Shares (Berlin: DI6.BE - news) fell 9% in early trading leaving them almost 50% down on the calendar year to date.

EasyJet issued a profit warning in June - the budget carrier saying then it expected revenue in the second half of the current year to fall as a result of the "additional economic and consumer uncertainty [that] is likely this summer ... following the outcome of the EU referendum".

There have been other headwinds.

The company had also previously warned of a £125m hit to full-year earnings from air traffic control strikes in France and passengers becoming more fearful of travel in the wake of terror attacks in Brussels and Paris.

No UK airlines are flying to the Egyptian resort Sharm el Sheikh after a Russian aircraft crashed soon after
take-off in November last year.

But easyJet said on Thursday it had achieved a "record" three months of trading in its final quarter.

"Passenger numbers for the three months were a record 22 million with a strong load factor of 93.9%," easyJet said.

Carolyn McCall, easyJet's chief executive, 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.

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