Tuesday, November 15, 2016

Brexit: EasyJet to set up operating unit in another EU state

European discount giant easyJet plans to set up an operating company in the European Union to ensure it keeps intra-EU flight rights once Britain – the carrier’s home country – exits the group.

EasyJet said in a Tuesday statement that doing so would allow it to “secure the flying rights of the 30% of our network that remains wholly within and between EU states, excluding the U.K,” according to The Associated Press.

But easyJet CEO Carolyn McCall said the EU-based unit would not prevent the company from keeping its headquarters in Luton, a suburb about 30 miles from London.

EasyJet did not specify where it might base its new operating company, but said it expected the move to cost it about 10 million pounds ($12.4 million) over two years, AP reports. Most of that cost would come from re-registering its aircraft in the country of the new operating company.

EasyJet revealed the plans Tuesday as it announced its quarterly earnings results. The Wall Street Journal reports the company’s “pretax profit, its most closely watched earnings measure, fell 28% to £495 million ($615 million) from £686 million ($852 million).”

Dragging down the discounter’s numbers were the weakening of the British pound following Britain’s Brexit vote and a series of terror attacks and political unrest that dampened demand in several of easyJet’s important leisure destinations.

“EasyJet achieved a resilient performance in 2016, in the face of significant challenges including a series of external events and foreign exchange headwinds,” McCall said in a statement. “Over the last year we have carried a record 73 million passengers who have enjoyed a third successive year of falling fares.”

McCall also struck an optimistic tone going forward.

“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,” she said. “In a tougher operating environment strong airlines like easyJet will get stronger and we will build on our already well-established network.”

“Almost half of our growth next year will be in the UK, with significant growth also in Switzerland, France and Italy. Our strategy of strengthening our positions at our key airports will see double digit growth in key bases in London, Manchester, Venice, Berlin and Amsterdam,” McCall added.

(Ben Mutzabaugh - Today in the Sky / USA Today)

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