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easyJet is counting the cost of political upheaval

Budget airline easyJet has been counting the cost of unrest and political tensions affecting Israel, Egypt and Russia after its latest trading update prompted the City to scale back forecasts for annual profits.

Chief executive Carolyn McCall said the airline expected pre-tax profits for the year to the end of September to be in the range of £545 million to £570 million.

This represents an increase of at least 14 per cent on the year before but City experts had pencilled in a figure of £572 million.

Ms McCall said the expected range assumes "no further significant disruption" and "includes the impact from the situations in Israel, Egypt and Moscow".

She said the quarterly performance was "solid" and that the airline was "well positioned to continue to deliver sustainable growth and returns".

Easyjet also said revenue per seat growth at Gatwick had been hit by its increased capacity at the airport after it picked up flying slots from rival Flybe.

But it said there was a significant opportunity over the next two years to drive improvement in revenue performance.

Total revenues for the third quarter grew 8.6 per cent compared with the same period last year to £1.24 billion and revenue per seat grew by 1.7 per cent to £62.47, or 2.7 per cent at constant currency.

But this was expected to slow to one per cent at constant currency for the second half as a whole as capacity grows.

Richard Hunter, head of equities at stockbrokers Hargreaves Lansdown, said while the profits guidance had undershot expectations, the figures showed a "very strong quarter" for easyJet.

Cantor Fitzgerald analyst Robin Byde said: "The 'miss' on full year guidance is clearly fairly minor and there are mitigating factors from the various political situations, and there is always the possibility that easyJet is being overly cautious.

"However we think that this outlook statement adds to investor unease that consensus forecasts have generally run ahead."

EasyJet's low-fares model has helped it and budget rival Ryanair weather an increasingly competitive European short-haul market, while traditional carriers have struggled.

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