by By Danica Kirka, Associated Press | April 02, 2019
LONDON (AP) - Discount airline easyJet warned Monday that the U.K.'s pending withdrawal from the European Union is causing travelers to hold back on booking tickets amid doubts over what Britain's future relations with the bloc will be. EasyJet said that as a result, its earnings would be weaker in the second half of the year. Its first-half loss of US$360 million was within expectations, but the outlook for the six months through September is "more cautious," according to the carrier.

"For the second half we are seeing softness in both the U.K. and Europe, which we believe comes from macroeconomic uncertainty and many unanswered questions surrounding Brexit, which are together driving weaker customer demand," easyJet CEO Johan Lundgren said. "We are rolling out further initiatives to support our trading."

Shares in the company fell by almost 10 percent in London on the news. Shares in other airlines and travel companies also fell, with British Airways owner IAG down 1.6 percent and travel group TUI down 2 percent. 

George Salmon, an analyst at Hargreaves Lansdown, said easyJet is facing issues with "two main moving parts," - namely fuel prices and customer sentiment. He said higher fuel costs are hitting profits, and Britain's pending EU divorce is making customers think twice before booking trips away.

"The group reckons demand will pick up later in the year, but a more pragmatic observer would say it's difficult to put a timeframe on when [the U.K. government] and the EU will solve the Brexit puzzle," Salmon said. "This uncertainty means easyJet requires some blue-sky thinking just now."

Earlier this year, the head of the leading association for airlines around the world warned that disruptions to air travel are possible if Britain leaves the European Union without a deal. Alexandre de Juniac, director general and CEO of International Air Transport Association, said the risk to traffic flow is partly mitigated after the announcement of contingency plans.

However, de Juniac voiced concerns about the possibility of some disruption that could involve flight adjustments and cancellations in the period after a so-called "no-deal" Brexit, because current guidelines relating to air travel between Britain and the EU reflect 2018 traffic levels. Passenger traffic is projected to grow by 5.5 percent in Europe this year.
"I am not concerned that there will be a major disruption, but I am concerned that there will be disruptions in the coming weeks, in the coming months, because it has not been calibrated properly," de Juniac told reporters in Dubai.
The British government has said that following Brexit, it wants arrangements with other countries to allow air travel to continue unimpeded. U.K. transport secretary Chris Grayling told the House of Commons in January that there would be no disruption to flights in the event of a no-deal Brexit. The Civil Aviation Authority was working on creating a "properly functional British alternative," he said.
IATA, which represents some 290 airlines, relies on open borders, de Juniac noted. "When you close these borders, it's not good news for us," he said. A study commissioned by IATA on the effects of Brexit stressed that Britain has the largest aviation industry in Europe, with around 80 percent of all North Atlantic traffic passing through British or Irish airspace.