It’s been a tumultuous time for airlines recently, who have lined up to shock the market by issuing profit warnings and revealing things are worse than previously thought.

So investors in EasyJet (EZJ) have breathed a sigh of relief this morning, with shares nudging 3.6% higher in trading this morning to £10.08, after it did indeed report the £275m pre-tax loss for the first six months to 31 March that it told the market it would.

The company has blamed lower ticket prices and Brexit uncertainty putting off holidaymakers for its loss, as well as rising fuel prices.


Total revenue increased by 7.3% to £2.34bn, though revenue per seat – a key industry metric for determining an airline’s profitability – dropped 6.3% to £50.71.

For airlines and tour operators, the seasonal nature of their business means that they often rack up losses during the winter period.


The £275m loss is a lot higher than the £18m figure it reported a year ago, and could explain why the airline’s share price has dropped over 35% in that time, but this year’s number was always going to compare unfavourably to last year.

The previous year was a one-off for EasyJet as it took advantage of scheduling problems at main rival Ryanair, as well as the collapse of Monarch Airlines.

While its cost per seat has risen by 3.9% to £56.66 due to the fuel price rise, unfavourable foreign exchange rates and a £10m hit from the drone chaos at Gatwick in December, market watchers will have been pleased to note that EasyJet expects to get its costs under control before the year is out.

The airline can’t control fuel prices or Brexit, but it can invest in measures to manage the impact of disruption for example, and now says that it expects its full year cost per seat to be down on last year.


In the eyes of investors, this may have helped make up for the fact it also foresees revenue per seat for the full year to be down, mainly due to the ongoing Brexit drama as well as a wider economic slowdown in Europe.

AJ Bell investment director Russ Mould says Brexit is a big headache for airline industry as a whole, so it’s hard for the market to argue with EasyJet blaming cloudy outlook.

He adds, ‘It is a tough time to be an airline in general with rising labour costs, excess capacity and spiralling fuel costs, not to mention the growing pressure on the whole concept of flying from environmental campaigners.

‘Against this stormy backdrop, EasyJet perhaps has a clearer flight path than some of its peer group.’

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Issue Date: 17 May 2019