General Industry

EasyJet Joins IAG in Paring Profit Goal After Brexit Vote

By Publications Checkout
EasyJet Joins IAG in Paring Profit Goal After Brexit Vote

EasyJet Plc joined British Airways owner IAG SA in warning that a drop-off in travel demand following the U.K.’s vote to leave the European Union will pare earnings over the rest of summer period.

Shares of the Luton, England-based company were trading down 10 percent at 1,181 pence as of 8:09 a.m. in London. The stock slumped 14 percent on Friday, when the result of the Brexit referendum became known.

The historic decision to quit the EU is likely to cause “economic and consumer uncertainty,” and as a result revenue per seat in the second half ending Sept. 30 is set to drop by “at least a mid-single digit percentage” from a year earlier, EasyJet said in a statement Monday.

The discount carrier’s comments come after IAG said Friday that gains in full-year operating profit will fall short of the 70 percent surge posted in 2015 as the poll outcome extends a slide in demand that began in the run-up to the vote. Earnings growth should still be “significant,” it said.

EasyJet also said that French air traffic control strikes and adverse weather weighed on sales in the third quarter, which ends Thursday, as seats needed to be reallocated to passengers from more than 700 flights cancelled in June alone. Those berths weren’t then available for lucrative last-minute bookings.

Pretax profit will probably be cut by 28 million pounds ($38 million) for the third quarter, with revenue per seat dropping 8.6 percent. That compares with a slide of about 7 percent that EasyJet indicated at its half-year results.

News by Bloomberg, edited by Hospitality Ireland