EasyJet shares dealt a 'huge blow', according to chief executive
The easyJet share price remains bearish following more travel uncertainty. The slump comes as easyJet’s chief executive, Johan Lundgren, described the government’s U-turn on flights to Portugal as a ‘huge blow’ for the airline.
- easyJet share price down 5.9%
- Travel uncertainty keeps easyJet shares bearish
- Will restrictions lead to a lost summer of travel?
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The easyJet share price opened at £9.37 on 7 June, following a downturn on Friday 4 June. That’s 5.9% down on the £10.01 easyJet shares opened on 3 June. More significantly, it’s down 8% from last week’s peak of £10.21, when the UK had reported zero deaths from Covid-19 the previous day.
Why has Portugal hurt the easyJet share price?
The British government announced on 3 June that Portugal would move from the ‘green’ list to ‘amber’. That means passengers arriving in the UK from Portugal after 4 am on 8 June will have to self-isolate at home for 10 days. Returning passengers will also have to provide negative PCR tests before departure and then twice more during their isolation period.
The unexpected announcement left thousands of passengers scrambling for early flights home. EasyJet chief executive Lundgren described the announcement as a ‘huge blow’ and one that hurts both the company and travellers.
Lundgren said in a statement: ‘Consumers were promised a waiting list to allow them to plan. Yet the government has torn up its own rule book and ignored the science, throwing people’s plans into chaos.’
The low-cost airline ramped up capacity to green list destinations, including Portugal, in early May following the implementation of a new traffic light system. Lundgren stressed at the time that travel to amber list countries wasn’t illegal, despite intimations from some government ministers that it was. However, he made it clear that the company’s main focus was green-listed countries.
Why has the U-turn sparked backlash from easyJet?
Even with the status of some countries in question, Portugal was lauded as a ‘safe’ destination. EasyJet added 25,000 more seats to its Portuguese travel routes, taking the total number of seats to quarantine free countries up to 1.65 million.
This push was designed to help redress some of the £1.3 billion easyJet lost in 2020. Now, however, there are concerns that uncertainty and a lack of clarity regarding how countries are categorised will lead to more losses.
Lundgren said: ‘While our European fleet is gearing up for summer as European governments open up travel for their citizens, the UK government is making it impossible for airlines to plan while consumers are left grounded in the UK’.
Will uncertainty remain an issue for the travel industry?
Other travel operators have also spoken out about the government’s recent decision. Like easyJet shares, Jet2 has hit a downturn in recent days. From a high of £14 last week, the Jet2 share price has dropped 7.1% to £13.
Jet2 CEO Steve Heapy said: ‘We are now calling for complete openness and transparency when it comes to the data, so that customers and the industry can really understand what is driving these decisions’.
The call for clarity is clear but the outlook for easyJet shares remains uncertain. The current consensus rating among analysts is to hold. Credit Suisse tipped the easyJet share price to reach £12 back in April. That was 20% above market value at the time but, in light of recent events, it is unclear whether it can achieve that figure this year.
The company is in a better position now than it was seven months ago when shares were as low as £7. However, with easyJet shares bearish since early May and fresh travel chaos, there may be some more turbulence ahead.
Can the easyJet share price survive more uncertainty?
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