Budget airline easyJet (EZJ) has warned of a weaker-than-expected second half to the year as it struggles to make progress in the face of softening economic activity in Europe and Brexit-related booking delays. Analysts have responded to the news by slashing forecasts by around a fifth, which has caused the shares to fall a tenth to 1,011p.
It was of particular concern that, despite easyJet's second half benefiting from Easter slipping into the period, management said it expected trading to be weighted towards the fourth quarter if revenue per seat is to finish "slightly up". With the economic outlook showing signs of deteriorating, investors could be in line for further unwelcome surprises.
First-half performance, while not inspiring, was much as expected. Trading suffered from falling revenue per available seat (down 7.4 per cent) and rising costs per seat, with a hit from higher fuel prices (hedged when prices were high last year). New accounting rules related to revenue recognition and not having Easter in the first half contributed to the group moving from a pre-tax profit for the six months to a £275m loss. Meanwhile, sales were 7.3 per cent ahead at £2.34bn while capacity increased by 14.5 per cent to 46.2m seats.
