Tuesday preview: Easyjet reports first quarter results

Easyjet is expected to report broadly flat first quarter revenue on Tuesday as the budget airline faced challenges including a weaker pound and terrorist attacks in Europe.

UBS predicts first quarter revenue of £932m, broadly unchanged from the same period in the previous year at £930m, as 8% growth in traffic was offset by a decline in revenue per seat. Management has guided for revenue per share to fall by “mid to high single digits”.

At the company’s 2016 full year results in September, Easyjet reported a drop in pre-tax profit to £495m from £686m the previous year. The group blamed a weaker post-Brexit pound, terrorist attacks in Europe, French air traffic control strikes and infrastructure problems at Gatwick for hurting profits.

Numis said the outlook for the 2017 fiscal year remains unclear in the wake of Brexit.

“Industry capacity growth continues to be strong and the demand environment remains uncertain across much of Europe and especially in the UK (which accounts for c.45% of source demand),”said Numis analyst Wyn Ellis.

“Comparitives are fairly easy in the first quarter (Paris atrocities last year) but we remain cautious about winter trading.”

Consensus forecast is for a fall in 2017 pre-tax profit to about £400m and Numis expects a “conservative” outlook at the first quarter update. Numis estimates revenue per seat will fall about 5.5% in 2017.

In December, Easyjet said cost per seat excluding fuel on a constant currency basis is expected to increase by about 1% in 2017. The company is targeting flat unit cost per seat in fiscal 2019 compared to 2015, excluding fuel at constant currency, given normal levels of disruption.

“As ever, the summer period remains crucial and at this stage it looks as though the overcapacity evident on routes into the Western Mediterranean, which was so evident in FY16, will persist,” Ellis said.

“We believe that Easyjet has an attractive structural growth opportunity in the short-haul aviation market in Europe, but given such an uncertain operating environment it is too early to increase weightings.”

Tuesday 24 January

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