What a difference a couple of days can make. On Monday (30 Jun) Bank of America Merrill Lynch’s (BAML) unforgiving analysts' note on Easyjet (EZJ) sparked a share price slump of more than 6%, yet today's passenger numbers give the Luton-based airline a 2.5% lift to £13.81. That said, the stock remains off by nearly 25% over the past three months.
Easyjet's June figures are certainly encouraging. Year-on-year passenger numbers rose 10.1% to 6.1 million. Load factor was aslso higher in June, rising to 92% from 89.9% in June 2013. Cancelled Easyjet flights in June numbered 380 with the airline blaming the majority of these on the French air traffic control strike on 24-25 June.
The rise in June passengers numbers is not solely an Easyjet phenomenon. Ryanair (RYA) today saw numbers up 5% to 8.3 million while British Airways owner International Consolidated Airlines Group (IAG) posts an 8.8% hike passengers carried to 7.1 million.
While today's passenger numbers and attendant rally could be viewed as undermining the BAML view that Easyjet is 'wilting under Europe’s sweltering summer airline overcapacity problem', the 30 June analysts' note pulls no punches, downgrading share price targets from £18.00 to £11.50.
With more turbulence expected in a crowded market place, BAML analysts Mark Manduca maintains that expectations the company will constantly upgrade its forecasts will be confounded.
BAML foresees annual profits coming in below consensus at £555 million this year, before shedding £170 million in 2015 as opposed to more general expectations of them rising by £80 million, attributing the fall to the erosion of Easyjet's advantage over other budget rivals from offering allocated seating.