Budget airline from the UK, EasyJet (LON:EZJ) has reported a pre-tax profit of £495 million for the period ending September 30, which is 27.9 percent lower than last year. This is, however, in line with a warning issued about possible lower profits last month. The passenger numbers, though, have gone up sharply by 6.6 percent.
Business revenues have also come down by 0.4 percent to £4.67 billion because EasyJet had to reduce the fares to stay competitive. Europe is seeing a price war among airline businesses, with the Dublin-based Ryanair (LON:RYA), and others reducing their fares to stave off competition.
EasyJet Bleeding Because of External Shocks
Carolyn McCall, who is EasyJet’s Chief Executive said while speaking to the press that there is no lack of demand because they were able to fill most of their seats, as is evident by the higher passenger numbers, but “external shocks” were harming the business. This includes the recent terror attacks in Tunisia, Egypt, the turmoil in Turkey, and across Europe, and the air traffic control strikes carried out in France.
Britain’s decision to leave the European Union and subsequent falling pound have affected bottom lines of the business. The sterling has depreciated since the referendum.
In view of these external shocks, “EasyJet achieved a resilient performance”, Carolyn added. She also informed the press that the business will not be making any job cuts to reduce their operating costs. She confidently ruled out that option.
EasyJet to Set Up Separate Unit in Mainland Europe
The Chief Executive also disclosed EasyJet (LON:EZJ) will soon come up with a separate airline business for mainland Europe, as a preparation when the UK eventually leaves the Union. EasyJet success has been based on operating cheap flights from the UK to the continent. The business operates flights across 11 airports in the UK. Their aircrafts fly on 830 routes across North Africa, the Middle East, and Europe.
The EasyJet stock has come down by 42 percent this year. It was up though on Tuesday by 1.22 percent.
They also want to renegotiate the present EU flying rights so that EasyJet is able to work their flights in the European Union. “We are not saying there will be no agreement. We just don’t know the shape or form. We don’t have the luxury of waiting. But we have to take control of our own future”, she said.