Budget airline easyJet Plc (LON:EZJ) is due to give investors a trading update on Thursday, and undoubtedly Brexit won’t be far from the agenda.
Numis Securities analyst Wyn Ellis, in a note previewing the update, said: “At the analysts’ briefing, post the Q3s, management said that RPS had been running down mid-single digits pre the June 23 Brexit referendum, but immediately post the Brexit vote demand took a downward lurch; with RPS down in double-digits.”
Ellis added: “On this basis our full year profit before tax (PBT) forecast of is £495mln, which we believe to be conservative in light of the resilient performance of the UK economy and the consumer post the Brexit vote.”
He highlighted that easyJet boss Carolyn McCall at an industry event last month had commented that the Brexit impact on the British consumer was normalising.
“However, it is apparent, in our view, that the industry outlook remains tough (as highlighted by recent press speculation about Monarch’s need for additional funding) and we do not expect the pre-close outlook statement to provide much reassurance,” Ellis said.
“Current political and economic uncertainty combined with the appalling frequency of terrorist attacks is unprecedented in our experience and the situation has been aggravated by continued infrastructure failures at Gatwick, EZJ’s largest airport.”
Ellis added: “We continue to believe in EZJ’s structural growth attractions and airlines typically get oversold when trading conditions get tough, but it may still be early to increase weightings.”
Numis rates easyJet as a ‘hold’, with a 1,200p target.