Taking off in early 2019, rising from £11.33 to £13.50 by the end of February, the easyJet shares hit some Brexit turbulence in the last couple of months.
At the start of April it had briefly fallen under £10, returning above £12 less than 3 weeks later, before pulling back to a current trading price of £10.41.
A big part of the company’s early climb was prompted by January’s Q1 results. While total revenue jumped 13.7% to £1.296 billion, fuelled by an 18.2% increase in capacity and a subsequent 15.1% rise in passenger numbers, total revenue per available seat actually dropped 4.2%.
This as an underlying 1.5% increase was negated by the ‘dilutive impact’ of first time flying in Q1 at Berlin Tegel, one-off benefits from 2018 – like the Ryanair cancellations saga – not being repeated, and issues relating to the Gatwick drone debacle. Talking of Gatwick, the drone scandal cost the company £10 million in customer welfare costs, on top of the £5 million in lost revenues.
Crucially, easyJet also stated the despite ‘consumer and economic uncertainty created by Brexit’, demand remains ‘solid’ and forward bookings past the then-exit date of March 29th were ‘robust’. It also claimed it was ‘well-prepared’ for the UK leaving the EU.
In terms of Friday’s half year report, easyJet is expecting revenue per seat at constant currency to decrease by ‘mid to high single digits’, due to the shifting of Easter into H2, a ‘more competitive market in Berlin’, and the greater than anticipated ‘phasing impact from H1 to H2’ of new IFRS 15 accounting standards.
Any further word on its Brexit preparations, given the shifting state of play politically, will also be welcome.
easyJet shares have a consensus rating of ‘Hold’ alongside an average target price of £12.79,
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