Are easyJet shares finally out of runway?

easyJet (LON: EZJ) may market itself as a low-cost airline, but the FTSE 250 airline’s shares have been anything but cheap, regardless of when investors hopped in. The easyJet share price is down 27% over the past month, 48% in a year, and 66% over the past five years to 393p today.

EasyJet’s staffing crisis is rapidly developing into a war on two fronts: recruitment and retention. On the recruitment front, easyJet is not the only airline complaining over government delays to the ID checking scheme that is a pre-requisite to begin training new employees. But the airline’s problems go deeper than this. Lundgren, careful to say he was ‘not blaming’ Brexit, has protested that the political separation means he had to reject the applications of 8,000 EU nationals. Aviation minister Robert Courts argues that Brexit had ‘little if anything to do with’ the current airline crisis. But easyJet’s CEO posits that ‘the pool of people is smaller, it’s just maths…pre-pandemic we would have turned down 2-2.5 per cent because of nationality issues. Now it’s 35-40 per cent.’ On the retention side, easyJet’s UK operations could soon be hit with UK strikes as the summer of discontent begins to infect inflation-hit employees. But problems are already manifesting abroad. A critical internal letter from the easyJet branch of the French SNPL pilots’ union has accused the airline of ‘unprecedented chaos’ caused by widespread ‘operational meltdowns.’ The union is ‘convinced that our disruption hasn’t even peaked yet and frankly this is a frightening prospect,’ and further pilot ‘mental health is at stake.’

But despite the issues, the airline has a strong long-term investment case. Staff shortages are not unique to easyJet, and Berenberg analysts argue it will benefit from increased pricing power as its rivals are also forced to cancel flights.

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