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easyJet warns on third-quarter profit, says Brexit clouds outlook

Published 27/06/2016, 08:28
© Reuters. File photo of an easyJet aircraft preparing to land at Manchester Airport in northern England
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LONDON (Reuters) - British budget airline easyJet (L:EZJ) warned on third-quarter profit on Monday, blaming the strike action by French air traffic controllers, congestion issues at Gatwick airport and severe weather.

Europe's No.2 low-cost carrier also cautioned that additional economic and consumer uncertainty was likely this summer following Britain's decision to leave the European Union in Thursday's referendum.

Shares in the airline, which closed on Friday down 14 percent after hitting a two-and-half-year low of 1,167 pence, were trading down 9.3 percent at 1,192 pence at 0824 BST.

Cantor Fitzgerald analyst Robin Byde cut his 2015-16 pretax profit forecast by 14 percent to 633 million pounds following the update, and downgraded his recommendation to "hold" from "buy".

"We interpret this statement prudently particularly taking into account the negative comments on the outlook for yields in H2," he said.

easyJet said the disruption in May and June, together with the Egyptair tragedy, had resulted in 1,061 cancellations and a drop off in consumer demand, hitting third-quarter profit before tax by about 28 million pounds ($37.5 million).

The airline is now forecasting that third-quarter revenue per seat at constant currency will fall by around 8.6 percent compared to the 7 percent decline guided at its half year results in May.

easyJet said as a result of the uncertain outlook after the Brexit vote it expected revenue per seat at constant currency in the second half to be down by at least a mid-single digit percentage compared to the second half of 2015.

It said recent movements in fuel prices and exchange rates were now expected to add around 25 million pounds of additional cost in the year to that guided in May.

easyJet was already facing an increasingly competitive market as larger rival Ryanair (I:RYA) and others add capacity and low fuel prices help all airlines to cut fares.

In May, easyJet had said it expected to meet analysts' average forecast for the 2015-16 year of 721 million pounds.

The firm said it will update on current trading when it publishes third quarter results on July 21.

© Reuters. File photo of an easyJet aircraft preparing to land at Manchester Airport in northern England

($1 = 0.7470 pounds)

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