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easyJet warns of softer demand amid Brexit uncertainty

File photo dated 08/03/17 of easyJet aeroplanes. The budget airline has added to fears over a summer of travel chaos as it revealed that nearly 1,300 flights were cancelled last month, with no end in sight to air traffic control strike action. PRESS ASSOCIATION Photo. Issue date: Thursday July 5, 2018. EasyJet said it cancelled 1,263 flights in June, with around 900 due to French and Italian strike action and a further 150 caused by air traffic control (ATC) restrictions and poor weather. See PA story CITY EasyJet. Photo credit should read: Gareth Fuller/PA Wire

EasyJet has warned that uncertainty over Brexit is holding back demand in the short term, as the airline said it would make a loss in the first half due to rising costs.

The company expects a pre-tax loss for the six months to March 31 of £275 million.

Revenue will rise by about 7.3% to £2.34 billion after capacity increased by 14.5%.

But total headline costs for the same period are to increase by 18.8%. This is a result of the enlarged capacity, as well as higher fuel unit costs and an increase in cost per seat.

Fuel will have an adverse effect of around £37 million, while foreign exchange will add a hit of around £8 million.

EasyJet said the results were in line with expectations, but that its outlook for the second half was now more cautious owing to macroeconomic uncertainty and unanswered questions around Brexit.

Chief executive John Lundgren said: "We are operationally well prepared for Brexit. Now that the EU Parliament has passed its air connectivity legislation, together with the UK's confirmation that it will reciprocate, means that whatever happens, we'll be flying as usual."

But he added: "For the second half we are seeing softness in both the UK and Europe, which we believe comes from macroeconomic uncertainty and many unanswered questions surrounding Brexit which are together driving weaker customer demand."

In the second half, the group expects revenue per seat to grow, while cost per seat will remain flat.

Earlier this month the operator pulled out of plans to form a consortium to bid for bankrupt Italian carrier Alitalia.

EasyJet said that following discussions with state-controlled railway Ferrovie dello Stato Italiane and Delta Air Lines about forming a consortium to "explore options" for Alitalia, it has now withdrawn from the process.