ESYJY Easy Jet PLC (QX)

By Robert Wall and Saabira Chaudhuri 

LONDON--Budget airline easyJet PLC warned on profit, joining a similar warning from British Airways parent International Consolidated Airlines Group SA and other fallout in signaling how the economic uncertainty after Britain's vote last week to exit the European Union would take its toll on earnings.

The latest warning comes amid further indications of nervousness in Britain's business community. In a survey of more than 1,000 businesses by the Institute of Directors, an organization for company directors and senior business leaders, more than a third of those polled said the so-called Brexit would cause them to cut investment.

"We can't sugarcoat this--many of our members are feeling anxious," said Simon Walker, the institute's director-general. "A majority of business leaders think the vote for Brexit is bad for them, and as a result plans for investment and hiring are being put on hold or scaled back."

Most business leaders surveyed said their first priority is the protection of the economy from the negative reaction in financial markets, followed by the need to secure a new trade arrangement with the EU.

A quarter of those polled said they would freeze hiring, while 5% said they would cut jobs. Roughly 22% said they are considering moving some of their operations outside of the U.K.

In its warning, Luton, England-based easyJet said a confluence of factors from the referendum's outcome would join with lower airfares, air-traffic-control strikes in France and exchange-rate effects to hurt results for the third quarter, ending this month.

Pretax profit would be hit by GBP28 million ($37.5 million), also reflecting the impact from continued suspension of flights to Egypt's Sharm El Sheikh after last October's suspected bombing of a Russian jetliner that departed the beach resort.

EasyJet said per-seat revenue would be 1.6 percentage points lower. Per-seat sales would fall about 8.6% in the period compared with the expected 7% decline, it said.

The airline also said it faced GBP25 million in further full-year costs.

With Britain's vote to leave the EU, easyJet said it anticipated "that additional economic and consumer uncertainty is likely this summer and as a consequence it is expected that revenue per seat at constant currency in the second half will now be down by at least a mid-single-digit percentage compared with the second half of 2015."

Rival IAG, which also owns Irish carrier Aer Lingus and Spanish airlines Iberia and Vueling, Friday said it no longer expected to reach its full-year target of an operating profit increase on par with last year's. The operating profit target was around EUR3.2 billion ($2.5 billion).

The warning from EasyJet about the uncertainty ahead for the airline comes after Chief Executive Carolyn McCall lobbied hard for the U.K. to remain in the European trading bloc. Pressure on the British pound intensified on Monday amid a volatile trading session for currencies in Asia, after the U.K. voted to leave the European Union on Friday and its currency closed at its lowest levels in more than 30 years.

The airline, Europe's second-biggest discount carrier after Ryanair Holdings PLC, now faces uncertainty over its operations, notably the traffic rights that allow the airline to freely service cities across the EU.

Ms. McCall said Friday that the company has asked the U.K. government and European Commission "to prioritize the U.K. remaining part of the single EU aviation market, given its importance to trade and consumers." The airline said it had "been preparing for this eventuality in the lead up to the referendum vote and has been working on a number of options that will allow it to continue flying in all of its markets," without providing details.

EasyJet said it had experienced 1,061 cancellations in the April through June months, also citing congestion at London Gatwick airport and severe weather.

Write to Robert Wall at robert.wall@wsj.com and Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

June 27, 2016 04:39 ET (08:39 GMT)

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