Shares dropped following the update, with the expectation that the airliner will make a loss of £275m.
Brexit uncertainty and rising costs create headwinds for Easyjet
- Despite expected turbulence we continue to recommend the shares as a ‘buy’ for investors willing to accept a medium level of risk.
- Shares drop 7% in early trading as market reacts to latest announcement.
- CEO states regardless of how the UK leaves the EU, they will continue to fly as usual.
The budget airline said today it expects to make a loss of £275m in the first half and said it was now more cautious on prospects for the second half of the year. Costs have risen 19% in the first half thanks in part to a rise in the price of fuel. The company cited macroeconomic uncertainty and Brexit as reasons for weaker customer demand. Despite this, revenue per seat is expected to rise after a 7.4% drop in the second half.
Following the update shares dropped 7% in early trading as a result. While the lowering of expectations for the second half is a negative for investors, it should be noted the CEO also pointed out recent government measures means it will be flying as usual after Brexit whatever the outcome.
Our View on Easyjet - Buy
While there was always likely to be some turbulence in the run-up to Brexit, the company’s relatively strong balance sheet and opportunities for growth in Germany alongside a healthy dividend mean we continue to recommend the shares as a ‘buy’ for investors willing to accept a medium level of risk.
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