easyJet’s shares are tumbling this morning after the UK airline issued a negative outlook for the third quarter. In a stamen, the airline described the operating environment for all European airlines in May and June as “extremely challenging” with easyJet being forced to cancel 1,061 flights in the third quarter due to a significant events, including the impact of continued strike action by French Air Traffic Controllers, runway and congestion issues at Gatwick airport, severe weather and the knock-on cancellations across the easyJet network. The airline said that as a result of these events, in June there were over 700 cancellations to date “with strikes and weather conditions accounting for most of these and over 300 flights cancelled in the last seven days”. In June 2015, EasyJet stated that it made 487 cancellations, of which 420 related to the Fiumicino fire and thus were largely pre-planned.
“These incidents, together with the Egyptair tragedy, resulted in some drop off in consumer demand leading to lower yield and have impacted third quarter Profit before Tax by approximately £28 million and have had a negative impact on third quarter revenue per seat of c.1.6ppts. This means that revenue per seat at constant currency in the third quarter will fall by around 8.6%, compared to the c.7% decrease guided at the half year results, as disrupted passengers were allocated seats that normally would have been sold close to departure for a higher yield.”
The airline also made another statement predicting a low down in bookings for the rest of the year due to the outcome of the EU Referendum. “We anticipate that additional economic and consumer uncertainty is likely this summer and as a consequence it is expected that revenue per seat at constant currency in the second half will now be down by at least a mid-single digit percentage compared to the second half of 2015. In addition, recent movements in fuel prices and exchange rates are now expected to add around £25 million of additional cost in the year to that guided at the Half Year Results. In response, easyJet is continuing its efforts to drive ex fuel cost savings.”
easyJet will provide a further update on current trading at its third quarter results on July 21, 2016.