EasyJet said an “extraordinary” year of terror attacks and weak pound would see annual profits fall by more than a quarter iStock

EasyJet said an "extraordinary" year of terror attacks, a summer price war and a weak pound would see annual profits tumble by more than a quarter.

The budget carrier estimated the falling price of sterling since the Brexit vote in June would cost it £90m, and that annual pre-tax profits would come in at between £490m and £495m, well below the £686m it posted last year.

The industry is also locked into a price war after larger Dublin-based rival Ryanair said in May it would slash fares by an average of 7% this year, as the sector struggles with overcapacity and weakened demand caused by terror attacks in Brussels, Paris, Nice and Turkey.

No UK airlines are flying to the Egyptian resort Sharm el-Sheikh after a Russian aircraft crashed soon after take off in last November. The carrier was also hit by air traffic control strikes in France earlier in the year.

EasyJet's chief executive Carolyn McCall said: "We have been disproportionately affected by extraordinary events this year but our excellent network, cost control and revenue initiatives and our strong balance sheet underpin our confidence in the business.

"The current environment is tough for all airlines, but history shows that at times like this the strongest airlines become stronger."

EasyJet flew a record 22 million passengers in the three months to 30 September, but added that it expects revenue per seat to fall by 8.7% in the final quarter of the year.

Jet fuel is priced in dollars, so the falling pound has made it more expensive for easyJet to run its aircraft. Shares fell by as much as 9% in early trading.

Airline analyst Gerald Khoo at Liberum said the update laid bare the tough conditions and warned the "challenges of the past year seem set to continue".