* Profit to fall more than 25 percent in 2015-2016
* Hit by 90 million pound currency headwind
* Says trend of lower ticket prices to continue
* Shares fall 6 pct
(Adds analyst comment, share price)
By Sarah Young
LONDON, Oct 6 British budget airline easyJet
warned that annual profit had fallen by more than a
quarter and hinted that trading would remain tough as fares
continue to decline and a weak pound weighs, sending its shares
down 6 percent.
The profit decline is the first since 2009 and in part
reflects easyJet's exposure to the security-hit destinations of
Egypt and Turkey and the French cities of Paris and Nice.
That combined with the devaluation of the pound since
Britain voted to leave the EU in June mean that easyJet has
fared worse this year than its bigger low-cost rival, Ireland's
Shares in easyJet dropped 6.4 percent to 938 pence by 0840
GMT, their lowest level since 2013. They are down 45 percent
this year, the second worst performer on Britain's bluechip
easyJet said pretax profit would be between 490 million
pounds and 495 million pounds ($624-629 million) for the year to
the end of September, below an already reduced analyst consensus
forecast for 497 million pounds.
The airline had warned in July that uncertainty meant it
could not give a profit forecast as it usually does at that
The weaker pound will result in a 90 million pound hit to
profit in both 2015-16 and the new financial year after sterling
fell to its lowest level against the dollar in three decades.
Chief Executive Carolyn McCall said that the carrier had
been disproportionately affected by disruption this year and
that she was confident in its future.
"The current environment is tough for all airlines, but
history shows that at times like this the strongest airlines
become stronger," she said.
easyJet's ticket prices fell 8.7 percent over the last three
months and the company expects the trend to continue into the
current quarter, suggesting intense competition in the European
short-haul market driven by low-fuel prices showed no sign of
Ryanair said in September that fares could fall by between
10 and 12 percent over the six months between September and
Analysts at several brokerages said the combination of
currency headwinds and lower fares would prompt them to cut
their profit forecasts for the 2016/17 financial year by as much
as 10 percent.
"Given the seasonality of easyJet and the airline industry,
we see it as unlikely there will be a positive catalyst much
before summer next year," said Liberum's Gerald Khoo, who rates
the stock a "sell".
Cantor analyst Robin Byde argued that, like Ryanair,
easyJet, was well placed to handle a competitive market,
underlining their threat to the established carriers like
British Airways, Lufthansa and Air France-KLM
"For me, it's still mainly easyJet and Ryanair against the
rest, and the low-cost carriers are frankly discounting quite
aggressively at the moment to keep cabins full and to keep their
growth plans on track," said the analyst, who has a "buy"
recommendation on easyJet.
($1 = 0.7868 pounds)
(Reporting by Sarah Young; editing by Kate Holton)