The Week Ahead: British Airways and EasyJet

Published in Investing on 28 August 2009

In a quiet week for the market, travel companies come to the fore.

As the vacation season draws to a close, travel companies could be counting the cost of a miserable summer. Airlines have been some of the worst hit by the economic downturn. Recently, Ireland's flag carrier Aer Lingus posted a widening of losses for the year after it was forced to cut fares. In the first six months, its losses more than trebled from €22m to €74m.

It is better to travel...

Next week, British Airways (LSE: BAY) and easyJet (LSE: EZJ) will issue their latest traffic stats. Last month, BA said underlying volumes had stabilised and that it expected an improvement in the peak summer months. That said, the key will be a recovery in its premium traffic which slumped 11% in July.

The summer months will be important for EasyJet too. The budget airline will be looking to improve on July's traffic figures that saw a 4.3% increase in passenger numbers. There's another month to go before the end of company's financial year, for which easyJet reckons underlying profit will be between £25m to £50m. But even at the top end of the forecast, this would be 60% below last year.

The downturn in air travel has impacted the Aviation Services division of Go-Ahead Group (LSE: GOG). The company said like-for-like aircraft turnarounds for the full year could be down around 10% and cargo volumes down by about 25%. However, Go-Ahead's Bus and Rail divisions have fared well. Bus revenues are expected to top last year's record level, and growth has been forecast in its three rail franchises. Go-Ahead will post annual results on Thursday.

Financial uptick

Full-year results will be on display at Hargreaves Lansdown (LSE: HL) next week. The fund supermarket should have benefited from the upturn in the stock market since the March lows. The value of assets held within its Vantage fund platform increased by 15% from £9.2 billion in March to £10.6 billion two months later. For more on the long-term growth record of this company, listen to this recent podcast, where I talked to Peter Hargreaves.

Sticking with finance, Abbey Protection (LSE: ABB) supplies legal and professional fee insurance products to small and medium-sized businesses. It will report interim numbers on Thursday and was first picked by our Champion Shares service last year. The company reckoned there is likely to be an increase in demand for its products notably in the fields of employment, human resources, compliance and protection from the demands of the Inland Revenue. 

Hays clutching at straws

A study by recruitment agency Hays (LSE: HAS) has found growing numbers of highly paid workers are swapping threatened private-sector jobs for careers in the more secure public sector. But the migration from private to public is unlikely to come to the rescue of the head hunter as demand continues to weaken in both temporary and permanent placement businesses. On Thursday, Hays could report a 40% drop in profits.    

Notable results and updates

Monday: Bank Holiday
Tuesday: Dechra Pharmaceuticals
Wednesday: DSG International (AGM), Hargreaves Lansdown and IQE
Thursday: Abbey Protection, British Airways (traffic), Go-Ahead Group, Hays, HMV, McBride and Premier Farnell
Friday: easyJet (traffic)

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