Brexit warning hits share price at EasyJet and rivals
Shares in Ryanair fell 5pc in early trading after EasyJet warned that the uncertainty over Brexit is resulting weaker demand and increasing softness in ticket yields.
EasyJet's caution in a first-half trading update spooked investors who have already seen Ryanair issue a profit warning back in January.
Shares in EasyJet slumped as much as 10pc. Wizz Air also declined, shedding almost 2pc in early trading. Shares in Aer Lingus owner IAG also fell as much as 2pc.
"For the second half we are seeing softness in both the UK and Europe, which we believe comes from macroeconomic uncertainty and many unanswered questions surrounding Brexit which are together driving weaker customer demand," said EasyJet chief executive Johan Lundgren.
"We are operationally prepared for Brexit," he added. "Now that the EU parliament has passed its air connectivity legislation and together with the UK's confirmation that it will reciprocate, means that whatever happens, we'll be flying as usual."
Mr Lundgren confirmed that EasyJet has also made progress on its EU ownership position, with more than 49.9pc of the carrier now owned by EU nationals or entities, excluding those from the UK.
Under EU rules, more than 50pc of shares in an airline granted an operating licence by a member state must be held by EU nationals.
EasyJet's sub-50pc EU ownership level is below that which would be required if there's a no-deal Brexit and no subsequent adjustment period for compliance with EU ownership requirements.
Mr Lundgren said that EasyJet had performed in line with expectations during the first half of its financial year and should post a headline pre-tax loss of about £275m (€321m).
Total first-half revenue at the airline is expected to have grown by 7.3pc to £2.34bn (€2.73bn), with seat capacity having grown by about 14.5pc.
Revenue per seat on a constant currency basis is likely to have fallen by about 7.4pc in the period. Total headline costs are expected to have risen by about 18.8pc due to increased capacity and higher fuel unit costs.