Easyjet profits fall sharply after 'difficult year'

British budget carrier easyJet reported a fall in profits of more than 30 percent on Tuesday, with a sharp decline in the value of the pound accounting for a considerable increase in jet fuel costs.

In their financial report for the year ending September 30, easyjet reported that despite an 8-percent increase in revenues past the £5-billion ($6.6-billion, €5.6-billion) mark, total profits after tax fell by 30.2 percent from £437 million in 2016 to £305 million in 2017.

Nonetheless, easyJet — Europe's second largest budget carrier after Irish airline Ryanair — sounded positive tones on release of the financial statement, hailing a "robust performance" and highlighting "positive revenue trends" for the first quarter of the new year on the back of the travails of some competitors.

"easyJet delivered a robust performance during a difficult year for the aviation industry, flying a record 80 million passengers at our highest ever annual load factor of 92.6 percent whilst growing capacity by 8.5 percent and revenues by over 8.1 percent to more than £5 billion," said outgoing CEO Carolyn McCall in the statement.

Flying in the face of difficulties?

It certainly has been a difficult year in aviation. Rising jet fuel prices — exacerbated for a British carrier like easyJet, due to Brexit-influenced falls in the pound against the dollar — have forced three major European airlines, Air Berlin, Alitalia and Monarch, out of business in the last six months. Competition has been intense, with falling ticket prices a feature of European skies throughout 2017.

easyJet specifically cited the fall of these rivals in their upbeat outlook for the year ahead, noting the potential benefits they will accrue themselves from the acquisition of the assets of these rivals, most significantly Air Berlin.

Last month, easyJet announced it had acquired a significant chunk of Air Berlin's operations at Berlin Tegel airport for €40 million ($46.9 million). While the deal is set to be fully confirmed, it will establish easyJet as the leading short-haul airline in the German capital.

Nonetheless, Tuesday's statement also reported that easyJet expects losses of around £60 million on its Tegel operations in 2018,  as it adjusts to taking over various strands of the Air Berlin business, including the leasing of 25 aircraft, the taking over of slots and the hiring of 1,000 Air Berlin staff.

New CEO on the way

easyJet's optimism in the face of the fall in profits may in part be driven by the steps it has taken to stave off some of its Brexit-related concerns. The airline has formed a new base in Austria, so it can continue flying unimpeded throughout the EU regardless of the details of the final agreement between the UK and the EU.

The airline also put a positive spin on the benefits of its own business model. "easyJet's model is resilient and sustainable and we now have a huge amount of positive momentum which will enable the airline to continue to grow profitably," said McCall, who was delivering her final set of results at the helm.

She will leave easyJet at the end of 2017 to take over as the new head of British TV station ITV. She will be replaced at easyJet by Johan Lundgren, who previously headed the German tourism multinational TUI.

aos/hg (AFP, Reuters)