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EasyJet profits sink despite record passenger numbers

23 November 2017

"EasyJet delivered a robust performance during a hard year for the aviation industry, flying a record 80 million passengers", said the carrier's outgoing chief executive Carolyn McCall, who announced her upcoming departure in July. The retreat of rivals comes as a boost after the weaker pound weighed on last year's earnings.

It has been a tough few months for the no-frills sector, with Ryanair cancelling thousands of flights largely owing to a pilots shortage.

The failure of Monarch on October 2 eliminated capacity at EasyJet's Luton and Gatwick hubs, and while the defunct company's operating slots are set to be reallocated they'll no longer be concentrated at a single rival.

The no-frills carrier said trading in its first quarter was "encouraging" - suggesting it was benefiting from the demise of Monarch Airlines, which collapsed last month in the wake of similar turbulence at Air Berlin and Alitalia. Shares in the company rose 0.7 percent at the news.

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Underlying profits before tax for the year ended September 30 fell by 17 percent to 408 million pounds, within a forecast range of 405-410 million pounds and largely due to a 101 million-pound hit from exchange rate moves. EasyJet itself is "very well hedged", she added.

Analysts are now looking to McCall's successor Lundgren to keep a tight rein on costs when he takes over on December 1, when he must also quickly get to grips with the airline's planned purchase of parts of Air Berlin.

A proposed dividend of 40.9p is due to be paid in March 2018, in line with the group's 50% pay-out ratio, it confirmed.

Analysts at Goodbody said: "We think this is an important development for the group as it offers a third higher-cost market in which to operate in, with current growth focused around its operations in France and Switzerland".

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EasyJet pointed to "an aggressive pricing environment which saw (its) net ticket revenue per seat fall by 7.8 per cent at constant currency".

The transaction is expected to close in December 2017, assuming antitrust and regulatory approval is received from the European Union.

In July, McCall announced she would leave easyJet to take up the role of chief executive at ITV.

The company said it's too early to comment on the outlook for next summer, while estimating that taking over Air Berlin plane leases and slots at the German capital's Tegel airport will incur losses of about 60 million pounds in fiscal 2018, plus 100 million in one-off expenses. She said she has met with successor Johan Lundgren and will see him a couple more times, while adding "if I have any tips I'm going to give those to him privately".

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EasyJet profits sink despite record passenger numbers