Holiday boom boosts Easyjet: Low-cost airline enjoys ‘record rebound’ after racking up third consecutive year of losses
Easyjet racked up a third year in the red despite a “record rebound” over the summer after pandemic restrictions eased.
The low-cost airline reported a loss of £178million for the year to the end of September, following a shortfall of £1.14billion in 2021 and a loss of £835million in 2020.
But chief executive Johan Lundgren has predicted it will outperform rivals in the coming months as the cost of living tightens and winter holiday bookings return to pre-Covid levels.
Record rebound: Easyjet chief executive Johan Lundgren (predicted) has predicted it will outperform rivals in the coming months as the cost of living tightens
“We see a strong demand for Christmas, for the new year, for the ski season,” he said. “Consumers will protect their holidays but will be looking for value and Easyjet will benefit as customers will vote with their wallets.”
Net income for the full year was impacted by Omicron, the war in Ukraine and disruptions related to the return of travel demand.
It took in £205million in compensation costs following cancellations and delays caused by staff shortages.
But an underlying measure of profits over the summer hit £674m, its best ever, with planes 92% full.
Lundgren hailed a “billion pound takeover”. For the year, revenue nearly quadrupled to £5.77 billion while passenger numbers rose from 20.4 million to 69.7 million.
Lundgren said: “Easyjet achieved a record rebound this summer with a performance that underscores that our transformation is on point.”
He was optimistic about the year ahead despite pressure on consumer finances and pressure on his costs, with fuel prices about 50% higher than a year ago.
Rising wages and a stronger dollar are also taking their toll. “Easyjet does well in difficult times,” said Lundgren, adding that he believed traditional national carriers burdened with billions of pounds in debt would struggle.
He said Easyjet would benefit as cost-conscious holidaymakers “gravitate towards value”.
Bookings for peak periods this winter, such as October mid-term and Christmas week, have returned to normal levels.
The “returns” on those sales – a measure of profit – have strengthened as it seeks to recoup some of its higher costs through more expensive tickets.
But the airline still has to stimulate demand for off-peak periods with attractive fare offers.
He also sees fuller planes and higher yields for Easter, but said it was too early to judge prospects for next summer.
Lundgren said there was strong demand for destinations in Turkey, Egypt and Greece. He expressed confidence in Easyjet’s growth prospects – and did not rule out taking over struggling rivals.
He said: “There will be a number of airlines that will struggle…and don’t have the resources to navigate through the uncertainty.” But he was skeptical of a wave of Europe-wide consolidation.
Analysts expect Easyjet to return to profit next year. But Citi experts said its pricing comments were “softer” than those of rivals. Liberum’s Gerald Khoo said the capacity forecast was “slightly more conservative” than expected.
The shares fell 2.6%, or 10.1p, to 382.9p, and are down 38% year-to-date.
Job applications are on the rise
Easyjet has received 19,000 applications for just 2,000 cabin crew positions for next summer.
The carrier is trying to hedge against a repeat of the chaos that crippled the aviation industry this year as holiday demand surged after pandemic restrictions ended.
He started preparing for 2023 this summer, two months earlier than normal. Chief executive Johan Lundgren said 1,500 staff have now been hired, but workers are scarce around its Gatwick hub.
“We have a huge amount of applications from the north of the UK, so of course you could have people working at Gatwick – but that’s not the plan at the moment.”