Easyjet's shares fall after warning over weaker pound and higher fuel prices

Easyjet has issued a trading update Photo: Barry Batchelor/PA Wire

British low-cost airline easyJet said the weaker pound and higher fuel prices would hit profit more than expected this year, sending its shares lower on Tuesday.

EasyJet and rival airlines have driven down fares as they add more seats to try to grow market share during what has been a period of low oil prices.

But fuel prices have started to rise - they are up to about $53 a barrel from around $30 this time last year - and the pound has fallen 17 percent against the U.S. dollar since June’s Brexit vote, affecting easyJet as it buys fuel in dollars.

As a result, easyJet said pretax profit for the year to Septmeber 30, 2017, would take a £105m hit, up from the £90m hit it flagged in November.

“The results were in line with expectations other than the guidance on currency and fuel which will probably drive about a ten percent downgrade to consensus (profit forecasts),” Numis analyst Wynn Ellis said.

Before the announcement, analysts had been forecasting pre-tax profit would fall by 16 per cent to £414m for the 12 months to September 30.