EasyJet shrugs off terrorist attacks to post flat revenues – but foreign exchange forces a swing to half-year loss
EasyJet has increased its dividend despite admitting there has been a declines in demand after terrorist attacks in Sharm el-Sheikh, Paris and Brussels, as the strong pound hit the budget airline's bottom line.
The figures
Revenues in the first half to 31 March rose 0.3 per cent to £1.77bn, although revenue per seat decreased by 4.2 per cent on a constant currency basis and 6.6 per cent on a reported currency basis, dropping to £51.29.
The company swung from making a £7m pre-tax profit in the first half of 2015 to a loss of £24m in this year, although at a constant currency basis, it was still in the black to the tune of £5m.
EasyJet recorded a basic loss per share of 5.1p, compared with a profit of 1.3p last year.
The load factor was flat at 89.7 per cent.
Why it's interesting
The figures have clearly been muted by the impact of terrorist attacks in popular destinations, with the cancelled flights to and from Sharm el-Sheikh resulting in a 1.3 per cent drop in RPS, and the fall in demand after the Paris attacks resulting in a further 2.7 per cent decline.
But EasyJet managed to broadly maintain its overall figures with "disciplined allocation of capacity, stable load factor and strong October trading".
But there was an adverse foreign exchange impact of £33m, which included £4m "relating to balance sheet revaluations".
However, EasyJet has said over the full year it still expects to grow passenger numbers, revenue and profit.
As a result, the annual dividend payout ratio will increase by a quarter to 50 per cent, subject to AGM approval.
What EasyJet said
Carolyn McCall, EasyJet chief executive, said it was a "robust financial performance during the half year despite the well-publicised external events".
She added: "Underlying consumer demand has been strong with UK beach traffic providing a healthy start to the half and easyJet's biggest-ever ski season helping to deliver increased passenger numbers and higher revenue during the first half.
"Consumers have enjoyed lower fares, which have decreased by six per cent year-on-year, the second successive year of falling fares, as the benefits of lower fuel costs are passed on to passengers. Active cost control by the airline has helped maintain margins.
"This performance is a clear demonstration of the strengths of EasyJet's unique combination of Europe's leading network coupled with friendly service, low fares, and digital and data leadership."
In short
Terrorism has played a part in stemming EasyJet's growth, but the foreign exchange impact has arguably been more damaging to its bottom line.