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EasyJet results could hint at Brexit vote effect on air travel

Published 15/07/2016

The firm had backed a vote to remain in the EU
The firm had backed a vote to remain in the EU

EasyJet is expected to give clues next week about the impact on consumer demand for cheap air travel following Britain's decision to quit the European Union.

The budget airline, which will report its third quarter results on Thursday, was forced to issue a profit warning in the days after the referendum, and then signalled that it could move its headquarters to Europe.

City analysts believe that full year profits could take a £50 million hit from a combination of slowing demand following the Brexit vote, currency and fuel price swings and disruption suffered in May and June.

Wyn Ellis, analyst at Numis, said: "Roughly four weeks on it will be interesting to see what impact Brexit has actually had on bookings at a vital time of the year and whether there is any further change to guidance."

Numis has downgraded its full year profit forecast from £716 million to £612 million. A consensus of City analysts puts the number lower still at £592 million.

Shares in easyJet have also been hammered since June 24, falling 25%.

Graham Spooner, investment research analyst at The Share Centre, said: "It has been a torrid few weeks for budget airline easyJet so the market will be looking for some reassuring comments to revive the stock. The company was keen for the UK to remain in the EU so the stock fell sharply after the EU referendum result was announced.

"The latest passenger stats in June were encouraging but the market will be keen to hear if expectations for subdued consumer activity this summer have changed."

Earlier this month, the firm said it was drawing up plans to potentially move its legal headquarters out of the UK and into Europe.

EasyJet said it will lobby British and EU governments to retain the status quo in the aviation market, which allows operators to fly across the continent in a deregulated environment.

However, if this cannot be achieved, it will look at options including setting up a new entity in Europe or moving its legal home from Luton to a European city.

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