Shares in airline companies, including British Airways owner IAG, were dragged down after easyJet PLC (LSE:EZJ) warned that costs were unlikely to fall as much as hoped this year due to higher fuel prices and French air traffic strikes.
The budget airline's management anticipated a £10 million adverse impact from recent higher fuel costs and £15 million from French ATC industrial action.
As easyjet shares fell 8% in early trade, those in International Consolidated Airlines Group SA (LSE:IAG) fell 2%, while Wizz Air Holdings PLC (AIM:WIZZ) was flat. By mid-morning, easyet was down 5.3%, while IAG had recoverd to a 1% decline.
Analysts at UBS and Peel Hunt say easyJet's Q3 results were slightly below forecasts, with pressure on consensus profit forecasts due to the higher costs.
Cost per available kilometre (CASK) was "a little lower than we had assumed", said Peel Hunt, though profit from easyjet Holidays was "encouragingly" ahead of forecast.
Despite the holiday outperformance, the broker said the full-year City consensus of circa £700 million is "likely to fall" by a mid-single-digit percentage due to lower airline earnings from French air traffic control strikes, slightly higher spot fuel costs, and revenue per kilo down 1% in the fourth quarter.
UBS said the "reduced fuel tailwind and strike impact will likely weigh into shares", though looking forward, underlying guidance for Q4 and Q1 2026 "looks supportive".
Panmure Liberum analysts cut their profit forecasts by 7% for this full year and their share price target to 730p from 800p but said they remain "positive given the continued strong performance at Holidays, which is the main driver of improved ROCE over the medium term".
Likewise, UBS kept its 'buy' rating and 775p price target.