EasyJet slides as planes fly with empty seats

Published on Tuesday 8 January 2008 20:44

SHARES in no-frills airline EasyJet tumbled to a six-month low yesterday after the budget airline revealed it flew with a greater proportion of empty seats last month.

Although passenger numbers rose 9.9 per cent to 2.9 million in December, compared with November, this is the lowest December passenger figures recorded for five years. The load factor – the proportion of available seats sold – fell 2.2 percentage points to 78.9 per cent against targets of 84 per cent.

Transport analyst Andrew Fitchie, from stockbroker Collins Stewart, said EasyJet was struggling to fill seats. "We remain nervous there will be dilution in ticket yields," he said. "This has to be a natural consequence of supply increasing so much in a weakening economic environment."

When the carrier posted a 48 per cent hike in annual profits in November, it forecast a 20 per cent rise in 2007/08 earnings. Fitchie said that since then retail sales "have undershot expectations, jet kerosene has traded up to 440 per tonne versus management's estimate of 368, and the pound has fallen 5 per cent which is not helpful with 40 per cent of costs in dollars".

Deutsche Bank also trimmed its 2008 earnings forecast for EasyJet by 7.4 per cent, saying: "The 10 per cent passenger volume growth was lower than our 15 per cent estimate in what is an important trading period."

Shares in EasyJet, which has been busy adding new routes, fell almost 14 per cent to 460.25p.

Panmure Gordon analyst Gert Zonneveld said the prospects were still good for the airline despite the disappointing passenger figures.

The fear that the credit crunch is spreading to the airline and travel industries also led to budget rival Ryanair shares falling by more than 4 per cent, taking the Irish-quoted stock below 4 for the first time in 18 months.