Shares in budget airline easyJet (EZJ) have taken a bit of a bashing this week after the company issued a profit warning. Hardly surprising, one might think, given the fact that a) it looks as if the Costa Del Sol is now the only ‘safe’ place left in which to take a summer break and b) it’s been mighty hot here in the UK, leading most to completely forget just how crap our weather usually is and proclaim that holidaying at home is where it’s at. While the weather will, I’m certain, very shortly return to being grey, cold and wet, meaning holidaymakers will want to head to warmer climes, the outlook is not so rosy a few key ones, which are effectively no-go zones right now.

Air traffic disruption has impacted the comany’s balance sheet directly too. I experienced this myself when, a few weeks back, I was flying to Spain. The plane was delayed an hour due to strike action by French air traffic controllers (wreckers!), after which it had its route changed to avoid French airspace. The plane had to take on extra fuel for the detour, but once the fuel was loaded the plane was 400kgs too heavy to take off! A rather sheepish sounding easyJet official then announced that four volunteers would be required to get off and take the next plane.

‘Fascinating!’ I thought. ‘How on earth are they going to make this happen?!’ I waited for the ensuing mudslinging match, wondering how the crew were going to accomplish this feat. There was silence as my fellow passengers and I listened to the proposal. As it happened, staff didn’t even embark on the diplomatic route. €200 in hard cash was offered to each of the the four volunteers. I considered going for this myself – but had barely blinked by the time four (now former) passengers had launched themselves out of their extra-legroom emergency exit seats (which they’d paid extra for in addition to ‘speedy boarding’ – they were those sorts of people), screamed an authoritative ‘YES,’ careered down the aisle, pocketed the cash and quite literally fell out of the door. They couldn’t get off fast enough.

As it turns out they weren’t the only people affiliated with easyJet who’ve been happy to take the money and run of late! One or two easyJet shareholders have also done just that on hearing the airline’s very cautious outlook. But while there’s no doubt that consumer confidence has been rocked by a spate of attacks by fanatical lunatics on aircraft and civilians, and that this is unlikely to improve in the near future, it might be fair to say that the Brexit-related headwinds will turn out to have been overstated. The bargain hunters will be trying to work out exactly what portion of the 30% plunge in easyJet’s market cap such an overstatement is accounting for.

Augustin Eden, Analyst (26 Jul)