Published: Tue, November 21, 2017
Money | By Armando Alvarado

Britain's easyJet encouraged by pricing trends as it outlines Air Berlin costs

Britain's easyJet encouraged by pricing trends as it outlines Air Berlin costs

EasyJet PLC (LON:EZJ) lowered its final dividend as the budget airline reported a decline in profits on the back of a foreign exchange hit.

Their profits have dipped from €557m to €460m.

The pre-tax profit figure came in after EasyJet said last month that pre-tax profits would be at the upper end of its guidance range, in the range of £405m to £410m, reflecting a "continuing improving revenue performance".

Meanwhile, Alitalia, Italy's flagship carrier, which filed for insolvency in April, is still looking for a buyer and Air Berlin filed for insolvency in August, after Abu Dhabi-based Etihad Airways, its main shareholder, withdrew its financial support following years of rising losses.

It booked an 8% increase in total revenue to just above £5bn.

EasyJet said the battle for business with competitors, such as Ryanair, left revenues per seat falling 7.8% at constant currency - meaning the effects of fluctuations in the value of the pound are stripped out.

Outgoing chief executive Carolyn McCall said: "EasyJet's model is resilient and sustainable and we now have a huge amount of positive momentum which will enable the airline to continue to grow profitably".

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This excludes the impact of its agreement to buy part of collapsed Air Berlin's operations at Berlin Tegel airport for a purchase consideration of €40mln.

The airline is expecting £100 million in one-off costs associated with the deal.

Outgoing chief executive Carolyn McCall praised easyJet's "robust performance during a hard year for the aviation industry".

"Our planned approach [.] has put EasyJet at a strategic advantage during a period when there have been bankruptcies and some airlines have struggled operationally", she said.

Analysts are looking to her successor Johan Lundgren, a former executive at TUI, to keep a tight rein on costs when he takes over on December 1.

Shares in Compass Group fell 3.6%, despite the world's biggest catering firm reporting a 5.6% rise in full-year operating profits to £1.7bn.

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