City downgrades hit easyJet shares
Budget airline easyJet was counting the cost of unrest and political tensions affecting Israel, Egypt and Russia after its latest trading update prompted the City to scale back forecasts for annual profits.
Shares fell by 4% as chief executive Carolyn McCall said the airline expected pre-tax profits for the year to the end of September to be in the range of £545m to £570m.
This represents an increase of at least 14% on the year before but City experts had pencilled in a figure of £572m.
Ms McCall said the expected range assumes “no further significant disruption” and “includes the impact from the situations in Israel, Egypt and Moscow”.
She said the quarterly performance was “solid” and that the airline was “well positioned to continue to deliver sustainable growth and returns”.
Easyjet also said revenue per seat growth at Gatwick had been hit by its increased capacity at the airport after it picked up flying slots from rival Flybe.
But it said there was a significant opportunity over the next two years to drive improvement in revenue performance.
Total revenues for the third quarter grew 8.6% compared with the same period last year to £1.24bn and revenue per seat grew by 1.7% to £62.47, or 2.7% at constant currency.
But this was expected to slow to 1% at constant currency for the second half as a whole as capacity grows.
Richard Hunter, head of equities at stockbrokers Hargreaves Lansdown, said while the profits guidance had undershot expectations, the figures showed a “very strong quarter” for easyJet.
Cantor Fitzgerald analyst Robin Byde said: “The ’miss’ on full year guidance is clearly fairly minor and there are mitigating factors from the various political situations, and there is always the possibility that easyJet is being overly cautious.
“However we think that this outlook statement adds to investor unease that consensus forecasts have generally run ahead.”
