Airline shares soar as easyJet’s profit expectations are boosted by exceptional demand for budget winter travel
- The low-cost airline now expects annual pre-tax profits to top £126m
- EasyJet expects first-half losses to be ‘significantly better’ than last year
- Around 5.6 million additional customers flew with the airline in the first quarter
EasyJet’s full-year profits are expected to beat current forecasts after a rebound in winter bookings, the group said on Tuesday, triggering a rally in airline stocks.
The low-cost airline now expects pre-tax profits to exceed £126m for the 12 months to September 2023, after suffering a loss of £183m the previous year amid lockdown restrictions Covid and widespread cancellations.
For the three months to December, the company said its overall pre-tax loss fell by £80m to £133m, with passenger and ancillary revenue both up more than 75%.
Upgrade: The low-cost airline now expects pre-tax profits to exceed £126m for the 12 months to September 2023, after suffering a loss of £183m last year.
EasyJet shares jumped 9.6% to 512.8p on Wednesday morning, making it the second highest riser on the FTSE 350 behind media firm Ascential Group.
Since the start of 2023, the company’s shares have seen their value climb 57%, more than 11 times the 4.6% expansion of the FTSE 250 index.
Other airlines saw their share prices rise on the back of easyJet’s results today, with shares of Jet2 jumping 4.7%, Wizz Air 4.6% and British Airways owner International Airlines Gro, by 1.8%.
Around 5.6 million additional customers flew with easyJet compared to the equivalent period in 2021, when the emergence of the Omicron variant caused governments to reimpose restrictions on cross-border travel.
This has helped its total load factor – the proportion of seats occupied by an airline’s planes – to reach 87%, about four percentage points below pre-pandemic volumes.
Although rising fuel costs and short-term aircraft leasing meant easyJet posted a loss, the company expects first-half losses to be ‘significantly better’ than last year .
Chief executive Johan Lundgren said any winter loss “would put us firmly on the path to full-year profit, where we expect to beat current market expectations, allowing us to create value for the customers, investors and economies we serve”.
He noted that the group had three of its best weekend sales since early January and filled five planes every minute during peak hours.
Looking ahead, easyJet said Easter demand is “currently trading very well”, with yields from tickets sold up nearly 25% on 2019 levels, while its package holiday business was over 60% sold for the summer.
Richard Hunter, Head of Markets at Interactive Investor, said: “Despite the inevitable economic clouds, such as a cost of living crisis which could threaten the consumer’s propensity to spend and rising costs, the he easyJet offer is currently bearing fruit.
“Its cheap fares come with major airports as destinations, unlike some of its low-cost competitors which fly to less central and therefore less convenient destinations.
“He is also in planning mode for the busy period ahead and hopes to learn from last year when operational capacity was tested to the limit as passenger demand picked up at a pace some could not handle. .”
Due to staff shortages in the spring and summer of last year, the airline has struggled to cope with the extraordinary resurgence in passenger numbers, resulting in the cancellation or delay of many flights.
To try to avoid future disruption, he launched a recruitment campaign called “Empty Nesters Take Flight!” – aimed at convincing people over the age of 45 to become cabin crew members.
