easyJet (EJTTF) stock slumped Tuesday after the London-listed airline posted a wider than expected loss for the first half of the year, driven by foreign exchange losses and fierce competition.
easyJet posted a pretax loss of £236 million, wider than the £18 million loss reported for the same period of 2016, and also wider than the consensus analyst forecast of a £165 million loss. The budget carrier said that revenue rose 3.2% to £1.8 billion ($2.2 billion), which was broadly in line with the Factset consensus. However, foreign exchange losses, rising costs and fierce competition all helped to push the company deep into the red at the bottom line.
Ebitdar, which strips rental costs out from the traditional Ebitda number, came in at a loss of £54 million, against expectations for a narrower loss of £19 million.
easyJet shares fell more than 6% in early trading, to change hands at a two week low of 1,220 pence before paring losses, which was in contrast to the 1.36% gain of the Stoxx Europe 600 TMI Airlines index.
"Looking ahead, we are seeing an improving revenue per seat trend as well as the continued reduction of competitor capacity growth," said CEO Carolyn McCall.
Tuesday's poorer than expected result and subsequent price action follows a period of strong gains for airline stocks in Europe, driven by improving load factors and easing concerns over the impact of recent terror attacks on tourist flows.
Airfrance KLM (AFLYY) has gained close to 85% for the year to date after recovering all of its 2016 loss and then adding some on top. This is while German airline Lufthansa (DLAKY) has gained close to 40% since the start of the year.