Airline shares nosedive after results warning
Shares in no-frills airline easyJet went into a tailspin today after it warned that tough competition could affect its traditionally strong summer and autumn season.
The group’s stock sank nearly 22%, or 62.75p, to 229.5p, after it said it was adopting a “cautious” approach to its expected performance for the full year.
The comments represent a marked change from easyJet’s stance in February, when it said it was “cautiously optimistic” about 2003/4.
Announcing interim results to March 31, easyJet said it faced an increasingly competitive market, with “unprofitable and unrealistic” pricing by airlines across all sectors in Europe.
It said demand in the first half of April met expectations, but had softened in the second half due to continued pressure from rivals and a weaker-than-expected Easter. Passenger numbers grew 14% to 1,947,675 in April against the previous year.
Passenger numbers so far in May are slightly lower than expected, but are on course for June.
Chief executive Ray Webster said the Luton-based carrier nevertheless remained clearly positioned to benefit from the growing demand for low-cost flights in Europe.
“EasyJet continues to strengthen its leading position and we expect to make continued and sustainable progress,” he said.
The UK-based budget carrier said losses before tax in the six months to March 31 had reduced to £27.3m (€40.4m) from £48.1m (€71.2m) the year before.
The group said it had performed well and continued to grow strongly, with passenger numbers up 15.9% to 10.8 million.
EasyJet said the results reflected the seasonality of its business and the exclusion of the Easter period from the data.
Revenues during the period climbed 18% to £439.7m (€650.6m) while yields and load factor – how full the group’s aircraft were – improved by 1.6% and by 1.1 percentage points respectively.
The airline said passenger growth was in line with a 15% increase in capacity, which took the group’s average number of aircraft in its fleet to 78 from 65.
It introduced the first nine of its 120 new Airbus A319 aircraft in the seven months to March 31 and has agreed financing for 82 of the jets.
It is launching a further 38 routes during the second half of the year including five new destinations – Berlin, Dortmund and Cologne in Germany, the Hungarian capital Budapest and the Slovenian capital Ljubljana.
