EasyJet warns of turbulence ahead after EU referendum vote

EasyJet investors have been advised to buckle up for a rough ride as the FTSE 100 airline warned on profit, partly because of Brexit turbulence causing the plunging pound and fewer fliers.

Shares flew down 17% as easyJet — headed by Carolyn McCall — recounted a litany of bad news and stormy forecasts.

It said May and June had already been tough before the EU referendum: the airline cancelled more than 1000 flights because of French Air Traffic Controllers’ strikes, runway problems at Gatwick, and severe weather.

Add to that the impact of Brexit, which easyJet said means “additional economic and consumer uncertainty is likely this summer”, and the budget carrier warned revenue per seat will drop by “at least” 5% in its crucial second half of the year.

It calculated that the air traffic control strikes cost £28 million by forcing the airline to allocate its last-minute spare seats — the ones it usually charges top prices for — to passengers who had suffered cancellations. “And recent movements in fuel prices and exchange rates are now expected to add around £25 million [in] costs in the year,” easyJet added.

Shares were down 220p at 1093p today — off from 1527p on Thursday before the news of Brexit broke.

The City was gloomy: Robin Byde, analyst at Cantor Fitzgerald, slashed his forecast for easyJet’s annual pre-tax profit by 14% to £633 million.

Analysts are set for aviation to take a major hit from Brexit. IAG, the parent of British Airways, issued a profit warning just hours after the UK voted to leave the EU on Friday, saying “after the outcome of the referendum, and given current market volatility”, it no longer expected to generate a similar increase in operating profit this year compared with that of 2015.

Damian Brewer, analyst at RBC Capital Markets, warned that airlines “live and die by the economic outlook”, and pointed out that any economic uncertainty generally sees would-be fliers staying at home.