Easyjet's shares fall after warning over weaker pound and higher fuel prices

British low-cost airline easyJet said the weaker pound and higher fuel prices would hit profit more than expected this year, sending its shares lower on Tuesday.

Tuesday, 24th January 2017, 9:39 am
Updated Tuesday, 24th January 2017, 9:42 am
Easyjet has issued a trading update Photo: Barry Batchelor/PA Wire

EasyJet and rival airlines have driven down fares as they add more seats to try to grow market share during what has been a period of low oil prices.

But fuel prices have started to rise - they are up to about $53 a barrel from around $30 this time last year - and the pound has fallen 17 percent against the U.S. dollar since June’s Brexit vote, affecting easyJet as it buys fuel in dollars.

As a result, easyJet said pretax profit for the year to Septmeber 30, 2017, would take a £105m hit, up from the £90m hit it flagged in November.

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“The results were in line with expectations other than the guidance on currency and fuel which will probably drive about a ten percent downgrade to consensus (profit forecasts),” Numis analyst Wynn Ellis said.

Before the announcement, analysts had been forecasting pre-tax profit would fall by 16 per cent to £414m for the 12 months to September 30.