EasyJet numbers cheer budget airlines' shares in UK and Europe

Shares in EasyJet rose more than 3 per cent and topped the FTSE 100 leaderboard after the budget airline reduced its losses with a 19 per cent rise in revenue for its recent half-year period.

The budget airline’s revenue surpassed £2bn for the first time for the six-month period at the end of March, while it issued a full-year profit estimate before tax in a range between £530m and £580m. Analysts at Liberum said this represented “a material uplift” to consensus forecasts.

But Gerald Khoo, analyst at the broker, added: “In our view this is already at least partially priced in. We believe the market is focusing excessively on short-term earnings momentum rather than fundamentals.”

Nonetheless, easyJet’s numbers lifted the mood toward the wider sector. Its fellow low-cost airline Ryanair gained 2.1 per cent, while Tui, the travel operator that owns German rival Tui fly Deutschland, rose 0.9 per cent.

Vodafone was the biggest single faller among London’s top tier shares, down by more than 3 per cent after news of the departure of its chief executive, Vittorio Colao, and the publication of its full-year results.

The announcement comes only days after the company sealed an €18bn takeover of Liberty Global’s German and eastern European cable companies. It precedes the merger of its struggling Indian business with Idea Cellular, a deal that is expected to close in June.

The 56-year-old Italian will be replaced by Vodafone’s current chief financial officer, Nick Read, who is 53.

Vodafone also reported its full-year results, including forecast-beating earnings before interest, taxation, depreciation and amortisation of €15bn — up 12 per cent from the same period a year ago.

Richard Hunter, head of markets at Interactive Investor, pointed to “pockets of caution” within Vodafone’s results and said Mr Colao’s departure “had an unsettling effect in early trade”. But he concluded that “given Vodafone’s cash generative abilities, the attraction of the dividend and its continuing growth prospects”, the shares justified a strong “buy” rating.

Analysis from UBS said Vodafone shares looked “cheap” on a couple of metrics, including their 6.5 per cent dividend yield.

“We think the main drivers for the share price will be visibility over [French competitor] Iliad’s entry into the Italian mobile market in summer 2018 and visibility over regulatory clearance for the Liberty Global deal in mid-2019,” said analyst Polo Tang.

Iliad’s stock, meanwhile, had the biggest single fall on the Europe-wide Stoxx 600, down 16 per cent from the previous session’s close. The tumble came after it replaced its chief executive and reported disappointing first-quarter sales at its higher-margin broadband business.

The group is best known for its low-cost mobile offering, and its plans to enter Italian markets have been a major talking point across the sector. Thomas Reynaud will move up to the top job from his current post as chief financial officer after the departure of current boss Maxime Lombardini in a reshuffle announced late on Monday.

Land Securities fell 1 per cent after it warned that the prospect of Brexit would lead to subdued property markets.

The comments from the UK’s biggest listed property company came as it reported full-year results, which revealed a loss of £251m after refinancing costs relating to £1.5bn of bonds.

Landsec’s measure of “revenue profit” increased 6.3 per cent to £406m and adjusted diluted earnings per share rose 9.9 per cent to 53.1p. As a result, the dividend for the period is being raised by 14.7 per cent.

The group also appointed a new chairman, Cressida Hogg, to succeed Dame Alison Carnwath.

European banking stocks were encouraged by news of progress on Commerzbank’s plans to resume dividend payments. Germany’s second-biggest bank by assets also reported a narrower than expected fall in first-quarter profit, helping it secure top place on the leaderboard in Frankfurt.

The lender, which is still part-owned by the taxpayer, said it had accrued €0.05 per share after its pledge to resume payouts for the 2018 financial year.

First-quarter pre-tax profit fell 12 per cent to €289m, but had been expected to decline as far as €276m.

Its shares rose 2 per cent in mid-session trade, against a slip of 0.1 per cent for the wider Xetra Dax 30, while the Stoxx 600 banking index ticked up 0.1 per cent.

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