Easyjet shares down on security fears profit effects

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

EasyJet saw cancellations during the last three months of 2015 rise to 684 flights compared to 468 for the same period in the previous year – mostly due to the cancellation of Sharm services.

Offsetting the gain from lower energy costs is dampened demand for travel to Egypt and Paris.

The carrier said that sales were hit at the end of a year ago as some passengers stayed away following the attacks, which left revenues per seat 3.7% lower over its first quarter to December 31.

But it added that it had seen a pick up in bookings and a marked improvement in revenue per seat for the second quarter.

The suspension of flights to tourist destination in Egypt in the quarter, following the downing of a Russian airliner last November in what is believed to have been a terrorist attack. It put 2 percent of that decline down to the fall-off in demand in the wake of the Paris attacks.

‘The easyJet customer-centric strategy of giving passengers low fares to primary airports continues to be executed well. The effect is an ongoing one too as easyJet has already said it wouldn’t resume the Egypt flights until 27 May at the earliest.

“This will ensure that easyJet continues to win and continues to grow revenue, profit and dividends”, she pointed out.

The continued slump in oil costs is promising to provide a stronger-than-expected earnings benefit for the airline.

The exchange-rate picture, though, is poised to remain hard.

“As a result of the robust cost performance, low fuel price, disciplined capacity allocation and resilient trading, the Board’s expectations for profit before tax for the year to 30 September 2016 remains in line with market expectationsit said”.