EasyJet raises profit horizon despite costs of strike turbulence

18 July 2018, 07:10

EasyJet has raised its full-year profit expectations despite soaring costs from strikes.

The no-frills carrier said it was planning to step up its battle to have air traffic control strikes in France banned after revealing it had to cancel 2,606 flights in its third quarter to the end of June.

That compared to just over 300 in the same period last year.

It said a "significant" majority of the cancellations were due to industrial action - mainly in France and also Italy.

The airline also cited air traffic control restrictions and severe weather.

EasyJet and its rivals have previously pleaded with European aviation officials to prevent the potential for chaos during the summer holidays by stopping walkouts by air traffic controllers, particularly in France.

The company confirmed on Wednesday it was planning to join a formal complaint to the European Commission.

The main thrust of the industry's argument is that strikes by air traffic controllers break EU law because they restrict freedom of movement for EU citizens.

Easyjet forecast a 3% leap in costs for the full financial year to September - with disruption costs rising by £25m in the third quarter alone compared to April-June 2017.

EasyJet also predicted a larger-than-expected £175m loss to be recorded in the current year from its Berlin Tegel operations following its purchase of parts of Air Berlin earlier this year.

Nevertheless, the company said it now expected full-year profits to come in between £550m and £590m compared to an earlier prediction in the range of £530m to £580m.

It credited "robust customer demand driving outperformance in our passenger and ancillary revenue growth."

Shares in easyJet rose more than 4% in early trading in response, settling at up 2% by market close.

Johan Lundgren, the easyJet chief executive, said: "EasyJet has delivered a strong performance during our third quarter driven by robust customer demand.

"The airline continues to go from strength to strength attracting more than 24 million customers in the period who chose to fly with us for our leading network of top European destinations, low fares and outstanding service.

"We have also seen the continued growth in ancillary revenues, mainly due to more passengers choosing to buy allocated seating and hold bags.

"With easyJet on track for a positive summer trading period during the fourth quarter, we are raising our guidance for full year headline profit before tax for financial year 2018 to between £550m and £590m."