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Bloomberg
EasyJet Plc said a decline in ticket prices is accelerating amid a fare war prompted by overcapacity across the European airline industry.
Britain’s biggest low-cost airline said on Tuesday that revenue per seat, a measure of fares, will drop by mid-to-high single digit percentage points in the fiscal second quarter through March, at constant currencies.
That’s after a 4.2 percent drop in the first quarter.
Demand remains strong, with first-quarter revenue up 14 percent, aided by a jump in spending on add-ons such as pre-booked seats, while forward sales are “robust†despite uncertainty around Brexit. But fares are taking a pummeling, especially in Berlin, where a base opened after the collapse of Air Berlin will post a loss in 2019. Ryanair Holdings Plc set the tone last week with a second profit warning in 3 1/2 months as winter fares fell three times faster than predicted. Conditions are now starkly different from a year ago, when the exit of Air Berlin and Monarch Airlines removed excess seats and lifted fares — though EasyJet says rivals have been more disciplined in restoring capacity growth in some of its markets. EasyJet said it’s comfortable with analyst earnings estimates, which suggest a 2019 pretax profit of 580 million pounds ($747 million), according to data compiled by Bloomberg.
First-quarter numbers will be dented by a 10 million-pound hit from disruption by December’s drone raids at London Gatwick airport, the carrier’s biggest base. Bernstein analyst Daniel Roeska said in a note that EasyJet has worked to hold fares steady at the expense of occupancy levels, and with some success, but will need a “very strong†second-half performance to reach the consensus figure. Bookings for Easter, which falls in its third quarter, may be stoking over-optimism.
Shares of Luton, England-based EasyJet fell as much as 1.3 percent and were trading 0.4 percent lower in London, trimming gains so far this year to 4.5 percent after the company lost a quarter of its value in 2018.