EasyJet Warns Of Tough Times For Airlines

EasyJet (Other OTC: EJTTF - news) shares have fallen sharply after it warned of a tough summer season following the recent terror attack in Nice (Milan: NICE.MI - news) , the failed coup in Turkey and the outcome of the EU referendum.

The low-cost carrier said "events in the last week" left it uncertain about how it would perform in the current period.

Bookings were flat compared to last year since the vote to leave the EU though average fares are about 5% lower, while the pound's plunge against the euro had cost it £40m.

Chief (Taiwan OTC: 3345.TWO - news) executive Carolyn McCall said travellers were being deterred by recent international events as well as the fall in sterling - which increases costs for UK holidaymakers.

It was forced to offer flight promotions for June and July - normally times of peak demand - in what Ms McCall said was "for airlines, one of the most difficult periods we have seen in a long time".

The group gave no profit guidance for the full-year to the end of September. Shares (Berlin: DI6.BE - news) fell 6%. The stock had already seen big falls after it warned of the impact of Brexit in the days after the vote.

EasyJet said revenue in the third quarter to the end of June fell 2.6% to £1.2bn compared to the same period last year, with the key measure of revenue per seat down 7.7%.

The performance was hit by the Brussels attack and Egyptair crash as well as air traffic control strikes, runway closures at Gatwick and severe weather, leading to 1,221 cancellations and disruption costs of £20m for the period.

Ms McCall said: "More recently currency volatility as a result of the UK's referendum to leave the EU as well as recent events in Turkey and Nice continue to impact consumer confidence."

The group also said it was in talks with the Government and regulators over securing continued European flying rights following the referendum and had plans in place should Brexit negotiations fail to maintain current levels of access.

It said it remained committed to the UK, its largest single market.

The update comes a day after Germany's Lufthansa cut its full-year profit target, saying advance bookings to Europe had fallen due to terror attacks and greater political and economic uncertainty.

British Airways owner International Airlines Group has also warned on profit in the wake of the Brexit vote. Its shares were down 4% in the wake of easyJet's latest update.