EasyJet plans to meet expectations despite difficult environment

Budget airline EasyJet said it would meet expectations in 2019 despite a worse trading environment than last year as worries over Brexit and economic weakness in Europe hurt consumer demand.

EasyJet had already said last month that its outlook for the second half of the year was more cautious because European travellers were holding off booking their summer holidays for fear of how the Brexit process will pan out.

EasyJet shares, which had fallen 13 per cent since the April trading update to their lowest in over two years, were up 5.34 per cent in Friday’s session.

Moving into the summer, EasyJet said that forward bookings for the third quarter were three percentage points behind last year at 72 per cent.

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Pricing

"It's not so much that there isn't any demand out there, but it's definitely a tougher trading environment, which has an effect on the pricing," chief executive Johan Lundgren said in an interview.

The update from EasyJet followed commentary from Thomas Cook, which issued another profit warning on Thursday due to heavy discounting in the face of weak consumer sentiment, impacted in part by Brexit. Mr Lundgren echoed the Thomas Cook chief executive by noting that even a delay in Brexit from March 29th until October 31st had not provided enough certainty to boost bookings.

“There wasn’t a big surge or a massive uptick in bookings when the Brexit date was extended,” Mr Lundgren told reporters. “On top of that, you then have uncertainties around macroeconomic factors across the market.”

The diminished consumer appetite means that revenue per seat is expected to be down in the second half, EasyJet said, though it also expected costs per seat to fall too, helped by prior investment to mitigate the impact of flight disruption.

EasyJet said its performance in the six months to March 31st was in line with expectations, with a 13.3 per cent increase in passenger numbers. Its headline loss before tax was £275 million (€314 million) in what was EasyJet’s off-peak season, also impacted by the late timing of Easter.

The airline said its profit expectations for 2019 were unchanged but its capacity growth in 2020 would be at the lower end of its historic growth rates.

– Reuters