EasyJet shares plummet on profit warning
Airline shares fell sharply this morning after budget carrier easyJet warned that higher fuel prices will dent its profits this year.
EasyJet said that if oil prices stay at their current levels its fuel bill for the second half of the year will increase by £45m. "It is unlikely that such a large and immediate fuel increase could be mitigated in the short term by revenue improvements and cost actions, therefore pre-tax profits for the full year would be below previous guidance," the company said.
EasyJet shares plummeted more than 16% this morning and later traded down nearly 10%, or 35.75p, at 339.25p. Budget rival Ryanair dropped 5.64% while British Airways shares were down 3.15% at 223p.
UBS analyst Tim Marshall downgraded his forecast for this year by 25%, next year by 41% and the following year by 40%.
"First-half results will be in line with our expectations, however it is pretty obvious that if the recent significant rise in the fuel price is maintained then our second-half profits will be lower than we had previously expected," said easyJet chief executive Andy Harrison. "Of course the price of fuel will hit all airlines and we remain convinced ... that we shall emerge as winners in a high oil price environment."
Oil prices have surged to hit fresh record highs in recent months amid turmoil in world stock markets. The cost of crude breached $110 a barrel last week.
The forward price for jet fuel this summer has ballooned to $1,000 a tonne from $840 a tonne at the beginning of last month, easyJet said.
http://www.guardian.co.uk/business/2....profitwarning