EasyJet has posted a total loss before tax of £236m for the six months to 31 March as weak sterling continues to cause turbulence for the low-cost carrier.
That widened from the £18m reported for the first six months of last year. While EasyJet boss Carolyn McCall said the first-half loss was in line with market expectations, noting the movement of Easter into the second half, shares dropped nearly six per cent in early trading, down 5.88 per cent to 1,233p at the time of writing.
Here's what analysts made of it...
"Worse than expected"
Alex Paterson at Investec noted the results were "a bit worse than expected with a headline loss before tax of £212m compared to our forecast of a loss of £167m, and consensus loss of £195m". The revenue for the first half of the year was also "slightly lower" than he expected due to a greater decline in revenue per seat than Paterson's forecast.
On time performance remains poor for the second quarter at 80 per cent and only 82 per cent excluding the UK. Significantly, EasyJet has swapped 30 of its A320neo options with 186-seats for A321neo with 235-seat configurations. Whilst this will allow for growth at primary airports, capacity growth is being increased and not scaled back as some expected.
"A solid start despite stiff currency headwinds"
Shares are sliding, which Robin Byde at Cantor Fitzgerald puts down to profit taking, saying "the stock has had a good run".
He feels the carrier has made a "solid start to the year despite stiff currency headwinds and a late Easter period".
"Overall, we think that this is a robust performance in a tough pricing, currency and operating environment," Byde said.
He also thinks there is cause to believe sunnier skies are ahead, saying:
The outlook looks a bit more positive with forward bookings up year-on-year, costs under control, better yields and negative currency impact abating. We expect consensus full-year forecasts to remain unchanged at this time but with risks on the upside.
"No financial targets have been provided but management summed up its outlook statement by saying it 'remains committed' to its full-year dividend policy based on a 50 per cent payout of profit after tax," Byde added. "Expectations for the full year are 'in line with current consensus market expectations'."
Unchanged profit outlook hints at "general conservatism on the part of management"
Gerald Khoo at Liberum agrees that the first half of the year was "always going to be challenging", though it has been "a touch worse than expected". While revenue per seat was down 9.7 per cent, at the bottom end of guidance, Khoo said forward bookings "appear encouraging".
He does, however, note that management has provided an unchanged profit outlook "despite better fuel and FX guidance", which implies "either a downgrade to the revenue outlook, or general conservatism on the part of management".
As for the drop in shares, Khoo attributes that to "a slightly larger loss than people were expecting in the first half, plus no increase to full-year guidance".