EasyJet shares dip after drop in revenue per seat

EasyJet shares fell more than 5% on market opening after the airline reported an 8.3% drop in revenue per seat for the three months ending June 30.

Total revenue for the quarter fell by 2.6% to just under £1.2 billion.

The airline blamed the Brussels attack, Egyptair tragedy, air traffic control strikes and congestion, runway closures at Gatwick airport and severe weather for 1,221 cancellations.

"Make no mistake, it’s a been a tough quarter for the budget airline with external events impacting revenues," commented Joshua Raymond, market analyst at XTB.com.

"What’s good is that the impact from an 8.3% decline in revenue per seat was minimised by a 3.8% improvement in cost per seat, and it’s here that the airline continues to benefit from the lower oil price as without fuel, cost per seat was largely flat."

He said the airline’s share price is still suffering since the Brexit vote and the uncertainty continues to be a significant drain on investor confidence.

"This quarters earnings report has hardly helped matters and this is why we have seen fresh selling into EasyJet’s shares this morning," he added.

EasyJet passenger numbers rose by 5.8% to 20.2 million during the quarter driven by an increase in capacity of 5.5% to 21.9 million seats and load factor increasing by 0.3 percentage points to 92.0%.

Chief executive Carolyn McCall said: "The economic and operating environment has been difficult in the third quarter due to a number of factors including air traffic control strikes and other industrial action, runway closures at London Gatwick and severe weather.

"These factors combined with industry capacity growth in short haul continue to have an impact on industry yields at a peak time of year. More recently currency volatility as a result of the UK’s referendum decision to leave the EU as well as the recent events in Turkey and Nice continue to impact consumer confidence.

"Despite this, easyJet carried more passengers and achieved higher load factors during the third quarter as easyJet’s brand continued to resonate strongly across Europe. easyJet is strongly controlling costs and driving continued improvement in operational and customer delivery. We are focussed on the opportunities that are inevitable from a tougher environment.

"The easyJet business model remains robust, with a strong cash position, solid balance sheet and a flexible fleet plan. The easyJet team is confident in its ability to navigate the period ahead and drive long term advantage."

McCall told the BBC that Britain’s vote to leave the EU had increased the airline’s cost by £40 million in just four weeks, pushing up the price of fuel which easyJet pays for in US dollars.

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