Budget airline says it is well-prepared for UK’s exit from EU but profits may be affected

EasyJet expects profits for 2019 to be hit by falling demand as it blamed economic uncertainty and Brexit for spooking passengers.

The airline said it was more cautious about the summer after weaker ticket sales in the UK and across Europe. Airlines and holiday firms have reduced prices because of the UK’s prolonged and uncertain withdrawal from the EU.

In a trading update, easyJet confirmed the revenue generated per passenger had declined by 7.4%, in line with previous warnings, and it expected first-half losses of about £275m.

The chief executive, Johan Lundgren, said the UK’s departure from the EU would affect trading over the next six months. “For the second half we are seeing softness in both the UK and Europe, which we believe comes from macroeconomic uncertainty and many unanswered questions surrounding Brexit, which are together driving weaker customer demand.”

Although overall revenues have increased because easyJet has flown more planes, that additional capacity has pushed down fares while fuel and other costs have risen. The carrier said there was an additional £37m cost for fuel, while the weakness of the pound had cost it another £8m.

EasyJet said it would be “flying as usual” whatever happened with Brexit, as a result of recent EU legislation and British commitments to ensure flights continued between the UK and Europe.

It recently set up a Vienna-based airline and transferred many of its fleet and crew licences to European equivalents to keep them operating. The carrier has also increased its non-UK shareholding to meet European ownership requirements. EU regulations require that airlines flying under a European licence must be majority-owned and controlled by shareholders from the trading bloc.

Lundgren said the airline had performed in line with expectations: “We have flown around 42 million customers with a significantly reduced number of cancellations and continued high levels of customer satisfaction.

“We are operationally well-prepared for Brexit. Now that the EU parliament has passed its air connectivity legislation and together with the UK’s confirmation that it will reciprocate, means that whatever happens, we’ll be flying as usual.”

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While easyJet’s losses are significantly higher than the £68m fall into the red in the first half of 2018, the airline’s performance a year ago was unusually strong, benefiting from difficulties experienced by its biggest competitor, Ryanair, and the collapse of Monarch, as well as an earlier Easter.

Ryanair said in February it did not expect air fares to rise to normal levels in the summer, blaming an excess of capacity in the short-haul airline sector. It plans to price seats at a level that will fill its planes, which it says will lead to lower fares.

Although Brexit uncertainty and a surplus of seats are denting airline profits, passengers have been finding relative bargains compared with previous years. Package holidays and flights departing the UK in April, when Britain could still potentially leave the EU without a deal, have been sold up to a third cheaper than last Easter.

According to Travelsupermarket, holiday companies have slashed prices for trips to destinations including Malta, Sardinia and the Algarve. Flights next month from London to Spain for as little as £10 each way were still available on the Ryanair website on Monday.

A spokesperson for the Association of British Travel Agents said while travel companies had taken strong forward bookings for the summer at the end of 2018, Brexit was “creating uncertainty across the board” and a slowdown in bookings had been reported among the organisation’s members.

Despite reassurances that flights would operate, potential holidaymakers have been warned about the validity of passports and other essential travel documentation, such as green cards for car insurance and entitlement to the European health insurance card.