Brexit cost easyJet £90 million and now shares are crashing

Shares in budget airline easyJet are crashing on Thursday after the company reported that the slump in the pound since Britain voted to the leave the European Union has cost it “around £90 million.”

In a trading update released on Thursday morning, the company says it took a massive hit from the crash in the pound against the dollar. So-called “adverse” currency movements will cost easyJet £90 million, the update says.

Not only is that a huge cost, it is also around £35 million more than the airline had expected Brexit to cost it in currency movements.

The pound was trading above $1.50 just hours before the results of the June 23 referendum on Britain’s membership of the European Union. But sterling crashed to a 31-year low against the dollar after the Brexit vote won. It’s trading at $1.2715 at 11.20 a.m. BST (6.20 a.m. ET) on Thursday.

As a result, easyJet now expects full-year profits to be around £490-£495 million for the year ending September 30. That’s around £25 million lower than the analyst consensus of £516 million. easyJet made a £686 million profit in 2015.

Investors took flight on the news, selling shares rapidly. The stock tumbled by as much as 8.5% at the open, dropping to a low of £9.275 at around 8:30 a.m. BST (3:30 a.m. ET). It has since recovered a little, and at around 10:50 a.m. BST (5:50 a.m. ET) the share price is down 6% at £9.425.

Here’s the chart of today’s performance:

Commenting on the results, easyJet’s CEO Carolyn McCall said:

“The current environment is tough for all airlines, but history shows that at times like this the strongest airlines become stronger. That is why we will continue to invest for the long-term success of the business, establishing even stronger market positions, delivering excellent customer service and establishing new revenue opportunities for the future.”

easyJet has been one of the biggest casualties in Britain’s financial markets since the vote to leave the EU, crashing from more than £15 per share on the day of the vote to less than £9.40 now — a fall of around 38%.

Mike van Dulken of Accendo Markets noted in an email earlier on Thursday, that fall was driven by fears about “how a budget airline so reliant on European destinations would work with a UK HQ post-Brexit.”

Here’s how its post-Brexit vote fall looks:

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