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EasyJet profits hit by 'extraordinary events'

07 October 2016 09:14

EasyJet says it could loose £125m in profits

EasyJet says it could loose £125m in profits

Low-cost airline easyJet says its profits will nosedive as terrorist attacks and air traffic control strikes are taking their toll on the company.

The airline reveals it will take a hit of more than £200 million due to a series of "extraordinary events".

Plunging pound has also taken its toll

EasyJet added it could lose at least £125 million in lost profit, and the tumbling value of the pound since the Brexit vote will cost it £90 million.

EasyJet chief Carolyn McCall said: "We have been disproportionately affected by extraordinary events this year.

"The current environment is tough for all airlines, but history shows that at times like this the strongest airlines become stronger. That is why we will continue to invest for the long-term success of the business."

Fare battle

The carrier has slashed ticket prices by around 9% year-on-year to boost demand as it has competes with Ryanair.

EasyJet's action to cut fares and launch a marketing push over the peak summer season has seen a record number of passengers fly with the group over the three months to the end of September, at 22 million.

But its load factor - a measure of how well it fills it planes - dropped from to 91.1% in September from 93.1% a year earlier.

Problems across industry

The travel industry has been knocked hard by a string of terrorist attacks in Belgium and France as well as Tunisia, while airlines are still not flying to Egyptian resort Sharm el Sheikh after a Russian plane crashed soon after take-off.

Tour operators and airlines have also had to switch away from once popular sun-seeker destination Turkey after an attempted coup earlier this year.

There have been fears over the future of UK airline Monarch as it rushes to secure investment, while Low Cost Holidays collapsed earlier this year, affecting more than 140,000 customers.

Shares in easyJet dropped by as much as 9% at one stage after the update before paring back losses, with experts saying trading conditions are set to remain tough.

Airline analyst Gerald Khoo at Liberum said the update laid bare the tough conditions and warned the "challenges of the past year seem set to continue".

Tourists should take out travel insurance no matter which airline they are flying with to protect themselves against delays and cancellations.