EasyJet sends Brexit fare warning for second half of year

Edmund Heaphy
Finance and news reporter
EasyJet said fares would decrease slightly in the second half of its financial year. Photo: Reuters/Stephane Mahe

EasyJet (EZJ.L) said on Friday that fares in the second half of the year would be “slightly down” as a result of Brexit-related market uncertainty and a wider economic slowdown in Europe.

Though the low-cost airline said only last month that it expected fares to increase, EasyJet noted that its overall financial outlook remained unchanged and that its full-year results would be in line with market expectations.

The warning came after it reported an expected £275m pre-tax loss for the first half of the year. This compares to a headline pre-tax loss of just £18m a year ago.

Even though passenger numbers increased by more than 13%, EasyJet blamed fuel price increases, the impact of foreign exchange, increased costs, and the December Gatwick drone incident, which it said cost the airline £10m, for the loss.

In December, reported drone sightings resulted in a 36-hour shutdown of London’s Gatwick airport, EasyJet’s largest base.

But revenue increased by 7.3% to £2.3bn, mainly due to capacity growth, from £2.2bn in the first half of 2018.

EasyJet’s warning about fares in the second half of the year comes even during a period that includes the typically busy Easter break, which fell later this year.

Pointing to “the ongoing negative impact of Brexit-related market uncertainty as well as a wider macroeconomic slowdown in Europe,” EasyJet noted that its cost per seat — excluding fuel-related costs — would actually go down in the second half of the year.

EasyJet CEO Johan Lundgren told the BBC that these factors meant the airline was facing a “different environment this year than what we saw last year.”

“It's not so much that there isn't any demand out there, but it's definitely a tougher trading environment, which has an effect on the pricing,” Lundgren said.