Easyjet update in focus after flights cancelled due to French strikes
Easyjet will be looked to for any guidance on the impact of recent French air traffic control strikes when it updates on Thursday after it revealed hundreds of flights had to be cancelled.
The group joined budget rival Ryanair in scrapping flights to and from France for two days in July due to the industrial action, with flights over France to destinations such as the UK, Greece, Spain and Ireland also affected.
Tens of thousands of customers saw their travel plans disrupted by the two-day strike on July 3 and 4, with Easyjet cancelling 274 flights, while Ryanair cancelled 170, affecting more than 30,000 passengers with the Irish carrier alone.
Luton-based Easyjet’s third quarter figures will be watched for any estimation of a financial blow from the disruption.
The carrier’s package holiday business is expected to be the standout performer once again in the quarter to the end of June, after the division delivered an impressive 42 per cent jump in pre-tax profits to £44m in the first half.
The airline business had to cut prices to help boost demand for the airline and offset rising costs in the first half and the City will be watching to see if that remains the case as the summer season kicked off.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Easyjet’s doing a great job of growing its fleet while keeping costs under control.
“But there had been some slight softness on pricing in the second quarter, so markets are keen to hear if that’s picked back up over the third quarter.
“The market seems fairly confident that this will be the case, and full-year pre-tax profit guidance of £703m should be well within reach.”
Easyjet reported widened headline pre-tax losses of £394m for the six months to the end of March, compared with losses of £350m a year earlier.
But the firm said at the time it was a “slight improvement” of about £50m when the later timing of Easter this year was taken into account.
Seasonal demand for air travel means airlines often record losses in the winter followed by profits in the summer.
Michael Hewson at MCH Market Insights said: “In order to wipe out its first half losses, Easyjet needs to see solid gains here, without having to discount.”