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“The FTSE 100 remained relatively calm in afternoon trading, with low-cost airlines Ryanair and easyJet taking centre stage as negotiations over the UK exiting the EU begin in earnest,” says AJ Bell Investment Director Russ Mould.
“Ryanair’s firebrand CEO Michael O’Leary responded to the difficult post-Brexit vote trading environment – driven by a dramatic slump in sterling – with a renewed effort to cut costs and boost demand through lower fares. This approach led to more bums on Ryanair seats but was not enough to prevent an 8% dip in third quarter profits to €95m. A 2% drop in Ryanair’s share price suggests investors remain nervous about the airline’s near-term trading prospects.
“O’Leary’s great rival easyJet has also moved to trim costs to mitigate the negative impact of the pound’s post-referendum plunge, focusing on the factors that it can control - namely engineering, maintenance, non-regulated airports and overheads. However, the company still expects to take a £105m profit hit from the currency’s weakness in 2017, while the terrorist attacks in Berlin have also impacted demand. Although the airline managed to carry 10% more passengers in January and filled a higher proportion of available seats, shares remain marginally down on the back of today’s trading update.”
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