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LONDON (Alliance News) - easyJet PLC on Tuesday said it swung to a loss in the first half of its financial year due to negative movements in foreign exchange rates and warned on the effect the recent terrorist attacks in Brussels will have on its third-quarter performance, but increased its dividend payout ratio.
Shares in easyJet were trading up 1.4% at 1,490.35 pence on Tuesday.
The low-cost airline said it suffered a GBP24.0 million pretax loss in the six months ended March 31, having made a GBP7.0 million pretax profit in the first half of the prior year.
Profit in the first half was hit by an "adverse foreign exchange impact" of GBP33.0 million, and would have been broadly flat on a constant currency basis, easyJet said. It warned that foreign exchange movements will hit second-half profit by GBP20.0 million, leading to an estimated GBP55.0 million hit in the full year ending September 30, although it said this was in line with market expectations.
easyJet also said it will increase its annual dividend payout ratio to 50% of post-tax income, from 40% previously. easyJet said the increase was driven by its confidence on the future outlook for the business.
"We are confident that over the full year we will again grow passenger numbers, revenue and profit," Chief Executive Carolyn McCall said in a statement.
Revenue rose very slightly to GBP1.77 billion from GBP1.76 billion, but revenue per seat fell by 6.6% to GBP51.29. On a more positive note, the number of passengers carried grew to 31.0 million from 28.9 million.
easyJet said revenue and passenger numbers were helped by its biggest-ever ski season, while UK beach traffic also provided a "healthy start" to the year, but said revenue per seat was hit as strong trading in October was offset by reduced demand following the terrorist attacks in Egypt, Paris and Brussels.
The cancellation of flights to the Egyptian beach resort of Sharm el-Sheikh hit revenue per seat by 1.3%, easyJet said, while a fall in demand following the attacks in Paris knocked revenue per seat by 2.7%.
easyJet had warned in January the incidents in Egypt and Paris late last year had delivered a knock-on effect on revenue in the first months of the current year, but still affirmed its expectations for the full year, saying that the situation looked brighter for the second quarter.
Load factor, meanwhile, remained flat at 89.7%, following a few months of consistent declines. Last week, easyJet reported a 0.4 percentage point slip in load factor to 90.4% in April from 90.8% in the same month a year earlier. This was its fifth consecutive monthly decline and came despite growth in passenger numbers to 6.4 million from 6.0 million.
The airline also warned third-quarter revenue per seat will decline by around seven percentage points due to the earlier timing of Easter this year and the fallout from the terrorist attacks in Brussels in March.
Despite this, easyJet said demand for European short-haul travel remains strong as a result of improved economic conditions and a lower oil price, adding current bookings are in line with the prior year.
"Consumers remain resilient and demand for air travel continues to grow, despite recent disruptive events," easyJet said.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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