EasyJet share price slips after a key warning by Jet2

EasyJet (LON: EZJ) share price crashed by more than 3% on Thursday as a sombre mood engulfed the regional airline industry. The stock retreated to a low of 408p, which is much lower than this month’s high of 444.8p. Still, it remains much higher than its October 23rd low of 349p.

Jet2 and Ryanair woes

There are two main reasons why EasyJet stock price retreated. First, the shares dropped after the latest earnings by Jet2, a British low cost airline. In its interim results for the half year, the company said that its revenue rose by 24% to £4.4 billion while its operating profit jumped to £617 million. Profit for the period jumped by 39% to £496 million.

While these results were strong, the company warned that its winter bookings have been weaker than expected. Average load factors has dropped by 1.3% while the average pricing has been robust. As a result, the Jet2 stock price crashed by more than 3.5%.

EasyJet stock also dropped after Ryanair, Europe’s biggest airline, lost its fight to overturn EU approval of Swedish and French aid to rivals during the pandemic. The company believes that the rescue package by these governments was unfair. The European Court of Justice rejected this claim.

Still, the most recent results by EasyJet showed that the company was doing well. The most recent results showed that the company’s profit before tax was between £650 and £670 million. H2 profit before tax is expected to come in between £850 million and £870 million.

As a result, EasyJet announced that it would pay a dividend, equaling 10% of FY headline profit after tax (PAT). For 2024, the company’s dividend will be 20% of PAT.

EasyJet share price forecast

EZJ chart by TradingView

Turning to the daily chart, we see that the EZJ stock price has been in a steady recovery recently. This recovery saw it rise from a low of 349.2p to a high of 444.8p. It has now pulled back and moved to the key support at 409p. Also, the stock has dropped below the 100-day moving averages.

A look at the chart shows that it has formed what looks like an inverse head and shoulders pattern. In price action analysis, this is one of the most accurate bullish signs. Therefore, there is a likelihood that the shares will resume the bullish trend as buyers target the neckline at 444.8p.