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Business News

EasyJet shares plunge on disappointing profit guidance

Shares fell 8% after it warned higher airport charges and cheaper tickets from rivals will see profits come in below analysts' expectations

EasyJet shares suffered their worst drop in two years in early London trading after the airline warned higher airport charges and fare pressure at Gatwick will hit annual profits.

The shares plunged 8 per cent shortly after the market opened, as the orange airline said its £20 million acquisition of new Gatwick slots from rival carrier Flybe had triggered “short-term yield pressure,” which is aviation-talk for cheaper tickets.

That, plus increased airport charges in Italy and higher spending on maintenance and lease costs, means easyJet expects pre-tax profit for the year to October to be between £545 million and £570 million — higher than last year’s £478 million profit, but lower than analyst expectations of £572.4 million.

Chief executive Carolyn McCall said that forecast was “assuming no further significant disruption” from the impact of instability in Moscow, Egypt, and Israel — where easyJet flies to Tel Aviv.

There are City concerns that the more the airline expands its network around the world, the greater the political risks. McCall said easyJet had delivered a “solid” performance in the April to June quarter, carrying 17.9 million passengers and growing revenue by 8.6 per cent to £1.2 billion — but the figures were boosted by the Easter holiday falling in the quarter.