Tuesday 22 January 2019 1:43 pm

Gatwick drone chaos costs Easyjet £15m but shares rise as profits stay the course

Drone disruption at Gatwick cost Easyjet £15m, the airline revealed today, as it said that 82,000 passengers were affected by the incident, but shares rose as profits stayed the course.

Easyjet was forced to spend £10m in customer welfare costs and lost £5m in revenue, it confirmed in a trading update this morning, as it admitted that 400 flights were cancelled as a result of the disruption, which brought flights to a standstill at Christmas.

Read more: Gatwick reopens after drone chaos ruins Christmas travel

Chief executive Johan Lundgren said: “With 82,000 customers disrupted we were disappointed it took such a long time to resolve. It was a criminal act, an illegal activity, and to some extent you can’t always protect yourself from that.

“We can never guarantee these things won’t happen again but the airports now are better prepared – Gatwick has acquired the sound system that is in place and there is general readiness and preparedness in place by the authorities.”

The disruption in late December led to a total shutdown at the airport for more than 36 hours as the army was brought in, believed to have deployed Israeli-developed anti-drone technology that can jam signals between drones and their operators.

Gatwick and Heathrow airports have since unveiled multi-million investments in systems to fend off drones to prevent future disruption.

Meanwhile the government is proposing to expand the drone exclusion zone around airports.

Despite the chaos, Easyjet saw shares grow 6.5 per cent to 1,237p as the firm said profits before tax remain on track to meet market expectations of £580m.

The airline also managed to grow revenue 13.7 per cent to land £1.29bn in the three months to the end of 2018, compared to the same period in 2017.

Of that, passenger revenue grew 12.2 per cent to contribute £1.03bn as passenger numbers grew 15.1 per cent to 21.6m as Easyjet upped capacity by almost a fifth to 24m seats – lower than planned due to the drone disruption and late plane deliveries from Airbus.

IG's chief market analyst, Chris Beauchamp, called it a "rather gloomy update", but added that investors are snapping up shares – at their cheapest since mid-2016 – in the hope of a better second half of the year.

However, the budget operator’s expansion into Berlin Tegel airport a year ago, taking over from Air Berlin, has dragged per seat revenue down 4.2 per cent.

Lundgren blamed “more aggressive pricing” from Ryanair and Lufthansa as well as slower than expected progress on optimising Easyjet’s performance at the hub, including on opening routes to destinations like Amsterdam and Geneva.

“We haven’t reached as far as we want to at this point in time,” he said. “This is something we will achieve it just takes a bit of time.”

Including the Gatwick disruption, the airline had 764 cancellations in the quarter, compared to 1,051 cancellations in the same period last year.

Looking ahead, competition in Berlin means Easyjet expects to fall to a loss in the coming financial year, as new accounting standards and Easter's shift from the first half of the year to the second means it will suffer a £100m hit in the first six months. It believes it will recoup these costs in the second half.

"The drone disruption at Gatwick in December means these results aren’t quite what Easyjet was hoping for at the start of the year, but it hasn’t blown things too far off course," Hargreaves Lansdown equity analyst Nicholas Hyett added, crediting add-ons like extra legroom for the sales boost.

"Integrating the old Air Berlin routes from Tegel airport is proving more of a challenge than initially expected, and that’s weighing on margins and adds pressure to deliver results over the summer.”

The airline also warned that pre-tax profits for the year ending September 2019 will take a £10m hit from foreign currency movements.

Read more: Government to expand drone exclusion zone around airports

The operator added that it is well prepared for Brexit, citing “robust” forward bookings beyond the UK’s planned exit on 29 March.

Easyjet has registered 130 aircraft in Austria and has ensured it will have spare parts stowed in the EU and a transfer of crew licences to the bloc in time for an on time departure of the UK from the EU.