British airline easyJet says profits fell by more than a quarter in the year just ended and suggests trading remains tough as fares continue to decline and a weak pound weighs. As Hayley Platt reports, the update sent easyJet shares down 6 percent.
easyJet was an outspoken supporter of staying in the European Union prior to the Brexit vote. And it seems its warnings then are proving valid. The British budget airline expects full year profits to drop more than a quarter - the first fall since 2009. The news sent shares down 6 percent to their lowest level since 2013. They're down 45 percent on the year. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "The weak sterling certainly has made matters worse for easyJet. They've suggested that it's hit them by around 90 million sterling during the course of the year and of course we've got to remember that as sterling falls this affects their cost base very directly." Demand for flights to Egypt, Turkey, Paris and Nice, were also dampened due to security fears following attacks. But Brexit is the biggest issue. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "How they hold on to their European franchise given the risk of the UK coming out of the EU could really damage that situation." Low fuel prices have helped airlines save on costs. But that's also created greater competition - forcing carriers to cut ticket prices. They fell almost 9 percent in the fourth quarter and easyJet says that trend will continue. Rival Ryanair said its September fares could fall up to 12 percent over the six months between September and March.