EasyJet's share price fell this morning after revealing its revenues have been dampened by reduced demand for flights in the wake of the terrorist attacks in Sharm-el-Sheikh and Paris last autumn.
Total revenues fell 0.1 per cent to £930m in the three months to 31 December, with currency headwinds also eating into growth: EasyJet recorded negative foreign exchange movements of £32m for the period.
The number of passengers carried increased by 8.1 per cent to 16.1 million, as capacity grew by 7.3 per cent to 17.8 million seats and the load factor increased by 0.6 percentage points to 90.3 per cent.
In October, the group delivered strong revenue per seat, but this was dampened, first by the attack in which a passenger jet was brought down mid-air en route from Sharm-el-Sheikh, killing 224 people, and subsequently the attacks in Paris in which 130 people were killed. That resulted in "lower demand and yield in November and December", EasyJet said, meaning revenue per seat was down 3.7 per cent at a constant currency basis.
Cost per seat, however, decreased by 3.7 per cent "as a result of robust management action and acceleration of the delivery of our cost improvement plans, as well as the benefit of a low fuel price". Excluding the cost of fuel, it rose by 1.3 per cent - better than had been guided last quarter.
EasyJet's share price dropped 1.5 per cent in early trading on the news.
Why it's interesting
With fuel prices dropping, now should be a good time to be a low-cost airline - but recent terrorist attacks have hurt the business - temporarily, at least.
Given that EasyJet was among a number of holiday and flight operators to cancel flights in and out of the popular Egyptian resort, it's no surprise that the company has been affected by the attacks.
Despite that, the group is making good progress on cost-cutting measures, which have enabled it to lower its overall costs and thus offset some of the declines elsewhere.
As consumers begin to feel more confident about travelling again, EasyJet says it is also seen a bounce back in its numbers. "Forward bookings for the second quarter are showing a marked improvement in revenue per seat compared to November and December," the airline said.
What EasyJet said
Chief executive Carolyn McCall said: "EasyJet's excellent customer proposition combined with low oil prices has allowed it to offer lower fares which has driven an eight per cent increase in passenger numbers in the first quarter.
"The EasyJet customer-centric strategy of giving passengers low fares to primary airports continues to be executed well. This year we will consolidate that with a relentless focus on cost reduction which is already delivering. This will ensure that EasyJet continues to win and continues to grow revenue, profit and dividends."
As things return to normal, the company should begin to soar again.