EasyJet stock price falls 7% after posting first annual loss

EasyJet stock price falls 7% after posting first annual loss
Written by:
Michael Harris
18th November, 11:45
  • EasyJet reported its revenue plunged by 52.9% to £3 billion for the full year ending September
  • EZJ expects only 20% of its planned flights for the final quarter of the year to take place
  • Shares of EasyJet are trading around 7.5% lower compared to yesterday’s high

Shares of EasyJet (LON: EZJ) tumbled over 7% after setting a 5-month high amid the first annual loss ever.

Fundamental analysis: Revenue crashes

EasyJet reported revenue of £3 billion for the full year ending September amid the coronavirus pandemic and collapsing demand for international travel. This is a plunge by 52.9% compared to £6.38 billion reported a year ago.  

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Investors were also disappointed to hear that the company expects only 20% of its planned flights for the final quarter of the year to take place. 

“I am immensely proud of the performance of the easyJet team in facing the challenges of 2020. We responded robustly and decisively, minimising losses, reducing cash burn and launching the largest Cost Out and restructuring programme in our history – all while raising more than £3.1 billion in liquidity to date,” Johan Lundgren, Chief Executive of EasyJet, said in the statement. 

When the British government eased travel restrictions over summer, EasyJet said its sales skyrocketed 876% in the five following days.

“The longer these travel restrictions are in place, it actually increases pent-up demand,” he added.

Overall, the latest figures from EasyJet are not surprising. The owner of British Airways, IAG, said earlier that its passenger capacity slid to 78.6% in the fiscal third quarter.

“These results demonstrate the negative impact of COVID-19 on our business, but they’re exacerbated by constantly changing government restrictions. This creates uncertainty for customers and makes it harder to plan our business effectively,” said CEO Luis Gallego.

Technical analysis: EZJ corrects lower 

Shares of EasyJet are trading around 7.5% lower compared to yesterday’s high after the company reported a historic annual loss. EasyJet share price closed 1.93% lower yesterday before extending the downtrend to trade nearly 5% lower today.

EasyJet stock chart (TradingView)

Looking from here, EZJ stock price is now heading towards the 200-DMA at 693p, which should offer nearby support. In case this is broken, then watch out for the horizontal support line at 660p. 

Summary

Coronavirus pandemic has continued to wreak havoc on the airline industry in 2020, resulting in EasyJet reporting a first annual loss ever. 

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