Tuesday 15 November 2016 7:23 am

Easyjet cuts dividend as profits nosedive following Brexit vote

Profits tumbled at Easyjet during the 2016 financial year, with the budget airline blaming a combination of the EU referendum result and a number of terror attacks across Europe over the last 18 months.

The figures

Profit before tax dropped 27.9 per cent to £495m from £686m in 2015.

Basic earnings per share declined by 21.9 per cent to 108.7p from 139.1p.

Revenue dipped by 0.4 per cent from £4.69bn to £4.67bn. Total revenue per seat fell by 6.4 per cent to £58.46.

The proposed dividend has been cut by 2.5 per cent from 55.2p per share to 53.8p.

Customer numbers grew to 73.1m from 68.6m.

Shares in the company were up 3.1 per cent in early trading.

Why it's interesting

The budget airline said the results demonstrated a "resilient underlying performance", with profits hit by "unprecedented external events" – which had an estimated impact of £150m. The events Easyjet highlighted were the UK's vote to leave the EU, and a series of terror-related events in Paris, Egypt, Brussels, Nice and Turkey.

The company issued several warnings on the effect Brexit would have, both before and after the referendum took place. 

Meanwhile, Easyjet cautioned that the impact of Brexit will continue to be felt for some time to come. The group said this morning that exchange rate movements are likely to have an adverse impact of approximately £70m in the first half year compared to the six months to 31 March 2016 and £90m for the 12 months to 30 September 2017 compared to the 12 months to 30 September 2016.

What Easyjet said

"Easyjet achieved a resilient performance in 2016, in the face of significant challenges including a series of external events and foreign exchange headwinds," said chief executive Carolyn McCall.

“The team has worked diligently throughout the year to drive out cost and secure our strong number one positions through disciplined growth. This has enabled Easyjet to deliver almost half a billion of profit and an attractive dividend in line with our 50 per cent pay out policy.

“Looking ahead, the Easyjet model remains strong as does the demand environment and we continue to see opportunities in the medium term to grow revenue, profit and shareholder returns. In a tougher operating environment strong airlines like Easyjet will get stronger and we will build on our already well-established network."

In short

The budget airline campaigned hard against Brexit – and now we can see why.