Easjyet plans overhaul to cut costs after annual profits fall

Library photo of an easyJet plane   Photo: Peter Byrne/PA Wire
Library photo of an easyJet plane Photo: Peter Byrne/PA Wire
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Budget airline easyJet has revealed plans for a company overhaul to slash costs after seeing annual profits nosedive by more than a quarter.

The low-cost carrier said it was planning a group-wide review over the next year to make it a “simpler, more efficient” company and to deliver “meaningful” savings.

It said more details would be given over the year ahead.

The group posted a 27.9% tumble in pre-tax profits to £495 million for the year to September 30, from £686 million a year earlier, after the plunging pound cost it £88 million and it suffered a hit of around £150 million from “unprecedented” events.

Airlines have been knocked by a combination of terror attacks across Europe, Egypt and Tunisia, air traffic control strikes in France, political turmoil in Turkey, as well as intense competition in the sector.

Carolyn McCall, chief executive of easyJet, said it had been a year of “significant challenges”.

She added the group had delivered a “resilient performance”, with a record 73.1 million passengers carried over the year, although revenues still fell 0.4% to £4.67 billion, as it cut fares.

EasyJet also faces ongoing woes from the Brexit-hit pound, forecasting another £90 million impact over the financial year ahead, with £70 million of that coming in the first half alone.

It will be helped by lower fuel costs, which it expects to fall by between £245 million and £275 million in the year.

Ms McCall said easyJet will increase its capacity by 9% in the coming year.

“In a tougher operating environment strong airlines like easyJet will get stronger, and we will build on our already well-established network,” she said.

Despite uncertainties created by the Brexit vote, easyJet said nearly half of its growth will be in the UK in 2017.

It is planning “double digit” growth in London and other key bases, such as Manchester, Venice, Berlin and Amsterdam.

An easyJet spokesman said the group review was not about job cuts, with the firm expected to employ more people year on year as it expands from 250 aircraft to more than 300.

He added the overhaul was “not an overnight cost-cutting exercise”, but an efficiency programme that would be carried out over the next two years, including looking at ways to use data and digital to bolster engineering and services.

Shares in easyJet lifted almost 2% as its annual profits came in at the top range of expectations, despite being sharply lower than a year earlier.