Easyjet shares lose altitude on weaker passenger traffic outlook
Easyjet was the biggest faller on the FTSE 100 today – closing down 9.7 per cent – after investors baulked at the low-cost carrier's 'cautious' outlook for the second half.
Budget airline Easyjet said earlier today it is “more cautious” in its outlook for the second half of the year, blaming macroeconomic uncertainty and Brexit for hitting customer demand.
In a trading update for the six months to 31 March, the airline said it expects a first-half loss before tax of around £275m, in line with previous announcements.
By the close of trading shares were nearing the 52-week lows, at 1,009p.
Its total first half revenue is expected to grow by around 7.3 per cent to £2.34bn with seat capacity increasing by around 14.5 per cent to 46.2m.
Revenue per seat at constant currency is expected to have declined by around 7.4 per cent, in line with its prediction of a mid to high single digit decline for the half.
Total headline cost in the first half is expected to increase by around 18.8 per cent, which it said was due to higher fuel costs, increased capacity and an increase in cost per seat excluding fuel.
Looking forward the airline said: “Whilst Easyjet will deliver H1 results in line with expectations, macroeconomic uncertainty and many unanswered questions surrounding Brexit are together driving weaker customer demand in the market, such that we are seeing increasing softness in ticket yields in the UK and across Europe. Given this uncertainty our outlook for H2 is now more cautious.”
Chief executive Johan Lundgren said: "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.”
George Salmon, Equity Analyst at Hargreaves Lansdown: “Although Easyjet shareholders would prefer underlying costs per seat to fall this year rather than be held broadly steady, the group itself isn’t doing a great deal wrong. The issue is that with the two main moving parts, fuel prices and customer sentiment, both out of their control airlines are always open to external turbulence. Easyjet investors are finding that out the hard way.