EasyJet issues warning on third-quarter profit

British budget airline EasyJet warned on third-quarter profits on Monday, blaming the strike action by French air traffic controllers, congestion issues at Gatwick Airport and severe weather.

Europe’s number two low-cost carrier also warned that additional economic and consumer uncertainty was likely this summer following the UK’s decision to leave the EU in Thursday’s referendum.

Shares in the airline, which closed down 14 per cent on Friday after hitting a two-and-half- year low of 1,167 pence, were trading down another 22 per cent at 1,020p.

Cantor Fitzgerald analyst Robin Byde cut his 2015-2016 pre-tax profit forecast by 14 per cent to £633 million following the update and downgraded his recommendation to “hold” from “buy”.

“We interpret this statement prudently particularly taking into account the negative comments on the outlook for yields in H2,” he said.

EasyJet said the disruption in May and June, together with the Egyptair tragedy, had resulted in 1,061 cancellations and a drop off in consumer demand, hitting third-quarter profit before tax by about £28 million.

The airline is now forecasting that third-quarter revenue per seat at constant currency will fall by about 8.6 per cent compared to the 7 per cent decline guided at its half year results in May.

EasyJet said as a result of the uncertain outlook after the Brexit vote it expected revenue per seat at constant currency in the second half to be down by at least a mid-single digit percentage compared to the second half of 2015.

It said recent movements in fuel prices and exchange rates were now expected to add about £25 million of additional cost in the year to that guided in May.

EasyJet was already facing an increasingly competitive market as larger rival Ryanair and others add capacity and low fuel prices help all airlines to cut fares.

In May, EasyJet had said it expected to meet analysts’ average forecast for the 2015-16 year of £721 million.

The firm said it will update on current trading when it publishes third quarter results on July 21st.

- (Reuters)