1H17 Results Worse Than Expected.
Post the rally and elevated multiple vs the sector the market was hoping for a cost save plan and capacity reduction. Nothing was forthcoming except a weak performance from the CEO on CNBC this morning and a miss on numbers. They most likely have alot further to fall but this was a trading call into numbers.
We step aside and book a 6.3% profit.
BRACE BRACE INTO NUMBERS
Various factors/events have catalysed a 50% rally off the lows for EZJ; the sterling rally, the oil sell off, pricing improvements for the legacy airlines and the French election. Most of these have played out/are turning.
Into the print tomorrow expectations are high, The stock now trades at a very healthy premium to the sector despite weaker earnings growth. Everyone is aware of the weak winter, and focus will be on the easy summer comps and trading momentum there.
To justify this multiple we need to see capacity cuts tomorrow, as well as a credible cost plan (given how poorly others have been executed). Otherwise we could be in for some disappointment.