easyJet share price plunges as airline warns on profits

Shares in easyJet (LON:EZJ) have tumbled more than 16 percent in London this morning as the low-cost airline warned on its third-quarter profit this morning, blaming strike action in France, congestion issues at Gatwick airport and severe weather. The profit warning follows the outcome of the EU referendum which is further expected to pressure the low-cost airline.

As of 09:03 BST, easyjet’s share price had fallen 16.76 percent to 1,093.00p, as compared with a 0.74-percent dip in the blue-chip FTSE 100 index. The shares have lost some 30 percent of their value over the past year, and are down by about 37 percent in the year-to-date.
easyJet announced in a statement this morning that it had experienced 1,061 cancellations so far in the third quarter on account of continued strike action by French Air Traffic Controllers, runway and congestion issues at Gatwick airport, severe weather and the knock-on cancellations across its network. These events, coupled with the Egyptair tragedy, have eroded the airline’s third-quarter profit before tax by about £28 million and have had a negative impact on the group’s revenue per seat which is expected to fall by about 8.6 percent, as compared with the seven-percent drop flagged in the company’s half-year results.

The budget carrier further noted that following the outcome of the EU referendum, it also anticipated economic and consumer uncertainty this summer and forecast that revenue per seat at constant currency in the second half will now be down by at least a mid-single digit percentage compared to the second half of 2015.
Reuters reported that Cantor Fitzgerald analyst Robin Byde had cut his 2015-16 pretax profit forecast by 14 percent to £633 million following the update, and downgraded his recommendation from ‘buy’ to ‘hold’.
“We interpret this statement prudently particularly taking into account the negative comments on the outlook for yields in H2,” he said, as quoted by the newswire.
easyJet’s profit warning came after the airline said on Friday that the UK vote to leave the EU will not have a material impact on the group’s performance. The airline noted that its initial focus would be discussions with UK and EU governments and regulators to ensure that Britain remains part of the single EU aviation market.
As of 09:36 BST, Monday, 27 June, easyJet plc share price is 1,195.50p.