- Easyjet announced it has been forced to cancel more flights
- A set of emergency cost cuts introduced to mitigate the impact of coronavirus
- Stock price trades 30% lower this week with more room for losses
Shares of the budget airline Easyjet are down 30% on the week amid coronavirus fears. Moreover, the company said it is forced to cancel more flights and introduce a pay freeze for its workers.
Fundamental analysis: Coronavirus hits airlines hard
The airline industry has suffered the hardest hit from the deadly coronavirus outbreak. Some experts believe that coronavirus’ impact on airlines may be greater than the financial crisis 10 years ago, with China being at the forefront of the impact.
“China… is a mess. When this situation settles, our forecasts indicate at least 400 million fewer passengers through China’s airports, and the Chinese airline system stuck with 150-200 excess airplanes. No snapback – the bubble is bursting, and it’s also affected by the creaking Chinese economy,” said consultant Mike Boyd of Boyd Aviation International.
Budget airlines, such as the UK-based Easyjet, have seen its shares tumble more than 20% in the past month or so. The company has been forced to cancel more flights, as well as to introduce emergency cost cuts to navigate through this difficult period for the entire industry.
“We will be making decisions to cancel some flights, particularly those into and out of Italy, while continuing to monitor the situation and adapting our flying programme to support demand,” the company said in a statement.
“While it is too early to determine what the impact of the COVID-19 outbreak will be on current year outlook and guidance for both the airline and holidays business, we continue to monitor the situation carefully and will update the market in due course”.
Some of the emergency measures include a suspension of pay for workers and of non-mandatory training, as well as unpaid leave offered to staff.
Technical analysis: Record weekly losses
Easyjet stock price closed the previous week above £15 just to trade barely above £10 a week later. There hasn’t even been an attempt from the bulls to close down the gap lower, just a straight vertical move to the downside.
The bears now seem determined to test the double-bottom support around £8.5 as any print below £8.5 will result in the 7-year low for the stock. In case of a relief rally, the bulls will look to push the price back to £12.7 where two key moving averages are located.
Shares of the British budget airline Easyjet have crashed 30% amid fears of the coronavirus outbreak impact on the global economy, and airline industry. The company has canceled more flights this week while also introducing emergency cost cuts, such as a pay freeze for workers.