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Hard Brexit has hard landing for airlines

Tuesday, January 24, 2017 - 01:33

British low-cost airline easyJet says the weaker pound and higher fuel prices will hit profit more than expected this year, sending its shares as much as 8 percent lower. Ivor Bennett reports.

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Where the government sees a hard Brexit airlines see a hard landing... Low-cost carrier easyJet warning profits will be hit by over 100 million pounds this year because of the drop in sterling. SOUNDBITE) (English) KATHLEEN BROOK, RESEARCH DIRECTOR, CITY INDEX, SAYING: "We were expecting weaker earnings from them. We're hoping that one-off massive decline in the pound in the second 6 months of 2016 will actually be a one-off. And then they can kind of rebuild their profit position. but we were expecting some weakness in 2016 and that is certainly what we got." Taking off again though, may not be so easy. Half of the company's revenues come from UK based sales Made worse by the rising price of oil, which it buys in dollars. What's more, the airline's locked in a price war with rivals. Ticket prices fell 8 percent in the three months before Christmas easyJet's expecting the same again by summer. Adding more seats is one way they're hoping to stretch their legs. While rival Ryanair is branching out into package holidays, hoping to become, what it calls, the Amazon of travel. (SOUNDBITE) (English) KATHLEEN BROOK, RESEARCH DIRECTOR, CITY INDEX, SAYING: "It's all about recommending things and trying to get you to buy. If some of these airlines can do the same thing then it'll open a precious new line of revenue which they really need." One line that doesn't seem to be diminishing - the queue to get on board. easyJet says demand from British holidaymakers is still strong, even if their currency isn't anymore.

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Hard Brexit has hard landing for airlines

Tuesday, January 24, 2017 - 01:33