EasyJet is Confident in Future Despite Making Loss on Terrorism

May 11, 2016

By Thy

EasyJet reported a pre-tax loss of £24 million for the six months to March 31 compared to a profit of £7 million a year earlier, hit by the terror attacks in Egypt, Paris and Brussels, which had dragged down the demand for flights. The low-cost competition in Europe also impacted the financial results of the British discount airline.

“Taking into account the timing of Easter and the effects of terrorism in Brussels, EasyJet expects third-quarter revenue per seat to decline by around seven percentage points,” the company said in a statement.

However, EasyJet still maintains an ambitious outlook for the year, saying it has confidence in the future success. The Europe’s second biggest low-cost airline has lifted its full-year dividend to 50% of post-tax income. EasyJet also stated that the dividend rise was not its response to Stelios Haji-Ioannou, the company’s biggest shareholder, who has been criticizing the dividend policy that had depressed the share price. Following the event, its shares rose 1.8% on Tuesday.

On Brexit, EasyJet’s Chief Executive Carolyn McCall expressed her opinions that the company is against Brexit but already has a plan so that the impact of Brexit will not interfere the development of the airline in case the event happens. “We have been operating in Europe for a long time and we are licensed in other countries as well,” she said.

UK - easyJet 2The buzz around EasyJet has surged to over 600% in the last 24 hours with over 1,000 voices. Dividend and balance sheet appear to be the two newest events of the discussions. Strong as the dividend pledge is, heavy competition is still an important issue that EasyJet has to deal with.

The Irish low-cost carrier Ryanair has outperformed EasyJet in terms of costs in most recent quarters with costs per seat at €26.78 while EasyJet’s first half costs per sear were at £38.61. Lufthansa – the Europe’s largest group of airlines – is eyeing more acquisitions to expand its newly re-launched discount carrier Eurowings, which is one of its moves to challenge other low-cost rivals in the region.  

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