What's going on?
EasyJet, the low-cost airline, said it made a lower profit in the past 6 months than investors were expecting. But it also pointed to sunnier skies ahead – and that helped the stock jump almost 3%.
What does this mean?
Recent terror attacks in Paris and Brussels have put a significant damper on the European travel industry. However, EasyJet’s CEO said that traffic for the upcoming 6 months is looking healthy – due partly to strong bookings from Brits looking for sunshine abroad this summer. EasyJet also boosted the amount of money it pays to its shareholders (a.k.a. its dividend). Declining revenue per passenger and potentially increasing fuel prices do remain challenges though.
Why should I care?
For the stock: EasyJet is affected by the economic health of the average Brit and European. The more people that are employed and the more that wage growth occurs, the more people can afford to go on holiday. So, EasyJet is probably cheering recent signs of a (very) nascent European economic recovery.
For you personally: Increased airline capacity in recent years could start meaning lower prices for you! European airlines like EasyJet, Ryanair and others are planning to add quite a bit of capacity in the coming years – and that should put some pressure on ticket prices (some pressure… don’t get too excited…). So keep an eye out for special promotions and/or generally cheaper tickets in the coming months/years.