© Reuters. An EasyJet airplane is pictured at Leonardo da Vinci-Fiumicino Airport in Rome


(Reuters) – British low-cost carrier easyJet (LON:) warned on Monday that demand and pricing were suffering from Brexit jitters and a weaker economic outlook, sending shares in European airlines lower.

EasyJet said it was set to rack up a 275 million pounds ($359 million) loss for the first half of its financial year, in line with earlier guidance, while expecting revenue for the six months ended March to grow 7.3 percent to about 2.34 billion pounds.

However, revenue per seat at constant currency is expected to have declined by about 7.4 percent and the company said it was seeing weakness in ticket yields across Europe, in contrast to guidance last November.

“For the second half, we are seeing softness in both the UK and Europe, which we believe comes from macroeconomic uncertainty and many unanswered questions surrounding Brexit,” Easyjet Chief Executive Officer Johan Lundgren said.

Shares in the company fell 7 percent in response, making them the biggest loser on London’s blue chip index and dragging other European airlines lower. IAG (LON:), owner of British Airways, slipped 1.8 percent and Ryanair fell around 5 percent.

“The outlook is the challenge, with management having less confidence on the second half – the summer,” Liberum analyst Gerald Khoo said.

“Brexit uncertainty is the main issue, but management sees macro uncertainty beyond the UK too.”

European airlines are battling over-capacity and high fuel costs. Iceland’s WOW air was the latest budget airline casualty last Thursday, halting operations and cancelling all future flights after efforts to raise more funds failed.

Airline chiefs said last month that while carriers will be able to withstand the impact of Britain leaving the European Union, even without a deal, the lack of political progress is frustrating and has dampened consumer demand.

Britain and the EU have said that flights will continue, even in the event that there is a no-deal Brexit and Easyjet said it was sure that it would be flying as usual.

EasyJet, which is the largest operator at Britain’s second-biggest airport Gatwick, said costs were set to rise 18.8 percent, driven by fuel costs and its investment in capacity.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link