easyJet revenue projected to fall by £80m as a direct result of Brexit

It has been a difficult year so far for easyJet, the UK’s largest low-cost carrier. Having seen a significant rise in cancellations in the last three months (1,221 as opposed to 726 for Q3, 2015) as a result of air traffic control strikes, runway closures at London Gatwick Airport, the crash of EgyptAir flight MS804, all of which has seen consumer confidence hit, the airline was hit by a US$52.5m loss over the devaluation of the pound after the UK’s referendum result on Brexit.
According to easyJet CEO, Carolyn McCall while presenting a trading update for Q3 up to June 30, “The most tangible effect [of Brexit] has been the devaluation of the pound both against the dollar and euro. The swing from June 23 against us on our unhedged [currency] is £40 million. That’s just since June—in the last four weeks—so that’s quite significant.” The company also added that it is “mobilized and actively engaging with regulators” over European flying rights, confirming that should the UK not remain in the deregulated European aviation market, easyJet’s contingency plan was “well developed” where obtaining an EU air operator’s certificate was concerned.
Passenger numbers rose 5.8% at 20.2 million, absorbing a 5.5% capacity growth, so pushing its load factor up 0.3 of a point to 92%. Though passenger number had increased, total revenue fell 2.6% to £1.2 billion and revenue per seat fell 8.3% at constant currency, or 7.7% on a reported basis, to £54.54 per seat. The airline had managed to shave 3.8% off its cost per seat including fuel, driven by maintenance and navigation savings, while its ex-fuel costs remained stable.
For fourth-quarter projections, easyJet said that “Capacity is expected to grow by 6%. Cost per seat excluding fuel at constant currency is expected to decrease by 1% for the full year.”
For the rest of the year, easyJet anticipates its fuel bill will fall by £75-£85 million compared to Q1 and Q2, 2015, amounting to £160-£170 million in savings for the full year. Because exchange rates have already had a £45 million adverse impact, this is expected to increase to £80 million for the whole financial year. (GB£1.00 = US$1.31 at time of publication.)