Europe's second-largest discount airline suffers in first-half as demand is hit by bombings of Russian plane and Brussels airport.

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The UK budget carrier easyJet has posted a first-half loss as a spate of terrorist attacks undermined demand for flights and contributed to a Europe-wide capacity glut that is weighing on fares and wiping out gains from cheap fuel.

EasyJet, whose easyHotel arm is set to expand across the Middle East, swung to a pretax loss of £24 million (Dh127.3m) from a profit of £7m a year earlier, it said on Tuesday. Analysts had expected Europe's second-biggest discount airline to report a shortfall of £25.7m, according to estimates collected by Bloomberg.

Based in Luton, England, easyJet halted flights to Sinai after the bombing of a Russian tourist jet in October, while November’s Paris shootings and the March 22 attacks on Brussels have further weighed on sales.

Third-quarter revenue per seat may decline 7 per cent as a result of the Belgian events, it said.

The chief executive Carolyn McCall said she will lift dividend payments and that EasyJet’s fiscal 2016 pretax profit should be in line with analyst forecasts. As of May 9, that figure was £721m, according to company-compiled data, down from a consensus of £738m as of January 26.

“We are confident that over the full year we will again grow passenger numbers, revenue and profit,” Ms McCall said, while cautioning that a “more competitive trading environment” is set to continue for the medium term as fuel prices remain low.

EasyJet faces heightened competition as the low-cost leader Ryanair targets more major airports, as well as from an expansion of IAG's Vueling discount-arm and makeovers at the no-frills units of Deutsche Lufthansa and Air France-KLM.

Lufthansa, Air France-KLM and the British Airways-parent IAG have all in the past two weeks posted quarterly earnings that beat estimates, while warning of weakening fares as sales fail to keep pace with summer capacity increases. Ryanair posts earnings for the year ended March 31 on May 23.

EasyJet’s numbers took a £33m hit from currency moves. The company, which also operates the easyHotel chain, plans to lift investor payouts to 50 per cent of post-tax profit from 40 per cent, subject to shareholder approval.

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