Another day, another fall easyJet (LSE:EZJ) share price. At 473.7p per share, FTSE100 on Tuesday (November 25), the airline fell again, extending its year-to-date losses to 15%.

Today’s decline of 1.4% may be even more surprising given that the highest forecast figures for the last financial year have just been published. Revenue rose 9% in the 12 months to September to £10.1 billion, even as broader consumer spending in all markets remained under pressure.

So what’s going on?

Solid numbers

Thanks to this escalate in revenue, easyJet’s pre-tax profits also rose by 9% to £665m over the period.

Demand for discounted tickets has been boosted by cost-conscious travelers switching from more exorbitant airlines. But that’s not the whole story.

Indeed, in today’s update, the easyJet Holidays division once again stole the show, making a pre-tax profit of £250m. The package holidays division achieved its average targets early and as a result the division’s profit forecasts have improved, with profits now estimated at £450m by 2030.

However, the market shrugged off the decision after easyJet also issued a frosty winter warning.

Winter misfortunes

The airline said winter losses would be around £30 million higher than previously expected. This reflects further investment in bases in Milan and Rome, where easyJet has already invested £20 million.

It was also said that “the airline’s pre-tax profit, particularly during the winter period, was more difficult to improve at the rate originally expected due to the pace of route preparation and the broader geopolitical, macroeconomic and competitive environment in individual markets“

These comments reignited margin concerns given the highly competitive landscape and continued economic pressures in key markets.

In better news, easyJet said it plans to escalate capacity by 7% this year. Forward bookings for the current and subsequent quarters are also higher year on year (by 2% and 1%, respectively).

Big dangers

Following today’s decline, easyJet shares are currently trading at a forward price-to-earnings (P/E) ratio of 6.6 times.

It doesn’t look high on paper. However, in my opinion it is a fair reflection of the enormous dangers facing the Luton-based company in the near and long term.

On the positive side, capacity and route expansion can deliver well earnings growth in fiscal 2026 and beyond. It also has huge cash resources (£602 million as of September) from which it can benefit from sustainable development.

However, it also faces stern challenges, and not only because of the economic and competitive context. Passenger fare (APD) increases planned in tomorrow’s budget could also hit future profits.

EasyJet also has to fight strenuous to keep costs under control. This year the warning is:moderate inflation as cost and operational efficiencies combined with favorable fuel prices partially offset market-wide cost inflation“

Given the airline’s slim margins, cost issues are a constant concern for easyJet and its shareholders. With the warning of possible demand pressures, the situation could become much more challenging in the coming months.

Overall, I think the easyJet share price has the potential to continue to fall. In my opinion, investors should consider avoiding low-cost airlines.