Budget airline easyJet has bore the brunt of a broker downgrade as the UK's equity index dropped further on Monday (June 30th).
The Luton-based airline was the worst-performing stock across the country as it fell 6.4 per cent on the FTSE 100 in percentage terms. The decline came after Bank of America Merrill Lynch cut its rating on the stock to "underperform" from "neutral". The move had a knock-on effect as easyJet's poor performance pulled down International Consolidated Airlines Group by 3.5 per cent.
News of easyJet's slump has increased fears over the impact of rising oil prices and overcapacity in the European market. The airline dropped 13.7 points to 6744.1 and there did not seem to be many encouraging signs from the eurozone as inflation figures remained at 0.5 per cent. This result has failed to improve confidence across the UK and the continent.
German airline Lufthansa had previously noted concern over rising fuel costs and recently released a profits warning. It stated that fares from overcapacity on European routes is proving problematic and this issue could spread beyond its operations and onto to other airlines whether they are budget or not.
Despite the broker downgrade there was some positive news from easyJet as the airline announced two new routes from Northern Ireland. The company will be running services between Belfast International Airport and Bordeaux and Jersey. The route has been earmarked for the seasonal flyer.
The company said: "The new flights will operate throughout the summer to provide additional easy and affordable holiday options for passengers in Northern Ireland while also attracting visitors from south-west France and Jersey."
Prices start from £27.49 per person allowing easyJet to stay competitive with its fellow budget airlines while keeping its customer base happy.
Find up to date information on spread betting strategies at City Index