EasyJet caution on pricing overshadows profit upgrade
It said it expected fullyear profit before tax to be in the range of £380m to £420m
Cautious comments by British budget airline easyJet on the outlook for summer pricing hit its shares and those of rival airlines yesterday, overshadowing an increased profit target.
The airline, which is seeking a replacement for CEO Carolyn McCall who is joining broadcaster ITV, said revenues per seat were up 2.2 per cent in its third quarter but expected yields to remain under pressure into its next financial year.
It said it expected full-year profit before tax to be in the range of £380 million to £420 million (Dh1.82 billion-Dh2.01 billion; $495 million-$547 million), above a company-supplied analyst consensus for £380 million.
easyJet said the wide range for its profit outlook reflected uncertainty over prices, echoing comments from other carriers.
“The third quarter performed better than we anticipated ... but as we’ve said in our guidance, for the fourth quarter we still see pressure on our yields coming through for the full year, and hence the range is quite broad,” Chief Financial Officer Andrew Findlay told reporters.
Shares rise briefly
Shares briefly rose at the open, hitting their highest level since Britain voted to leave the European Union in June 2016, before reversing and dropping 4 per cent to 1,361p. Shares in other European airlines also fell by between 1.5 and 4 per cent.
easyJet’s stock remains up over 30 per cent so far this year.
Despite bumper summer bookings and profit upgrades, some European carriers have cautioned that pricing would remain tough as low fuel prices lead them to add seats, albeit at a slower rate of expansion than last year.
Lufthansa said on Monday after upgrading its 2017 profit target that it expected unit revenues to be down in the second half of 2017.