StockBeat - EasyJet Defies Market Gloom With Upbeat Outlook

By Geoffrey Smith

Investing.com -- Is Easyjet about to turn a corner?

Europe’s second biggest discount airline (LON:EZJ) has had a miserable last 12 months, losing over 42% on a combination of rising fuel prices, overcapacity, drone-related disruptions at London’s Gatwick airport and weaker-than-expected growth across the continent.

All overshadowed, of course, by the uncertainty created by Brexit, which managed to rear its ugly head again on Thursday as the Conservative Party ramped up preparations to ditch Prime Minister Theresa May before the scheduled exit date of Oct. 31.

But this morning, Easyjet stock is up over 2.7%, after the airline stuck to its full-year target despite posting its biggest-ever loss for the six months through March, the first half of its fiscal year.

It’s a rare bright spot on a morning overshadowed yet again by fears of the U.S.’s trade war with China and the growing risk of an actual shooting war with Iran. The benchmark Euro Stoxx 600 was down 1.8 points, or 0.5%, at 381.60. The FTSE 100 fell 0.4% while the German Dax dropped 0.6% and the Italian FTSE MIB faring a little better, slipped 0.3%.

Partly, that’s because the results are no worse than the airline warned six weeks ago. And partly it’s down to the fact that management is still reckoning on a strong summer season (which appears to have started with a decent performance over Easter). And partly it’s due to CEO Johan Lundgren saying that the company will likely ease up on adding new seats next year.

EasyJet has been one of the main drivers of a big increase in capacity over the last year, as airlines bet on a sustained rise in European demand that failed to materialize due to the economic slowdown.

It’s planning to add nearly twice as many seats as its competitors over the next six months. That means it’s more than usually dependent on consumers overcoming their Brexit angst and committing to a summer break.

Elsewhere Friday, EasyJet competitor Norwegian Air Shuttle ASA (OL:NWC) soared over 13% on Thursday on the back of a report in the Spanish newspaper Expansion saying that takeover interest in the airline is reviving. That’s despite IAG (LON:ICAG) CEO Willie Walsh saying last week that he wasn’t looking at renewing his interest after two unsuccessful bids for the company at a much higher price last year. Oslo's stock exchange is closed for a holiday today.

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