EasyJet losses narrow to £169m on easing travel restrictions as airline raises profit hopes in 2023
- EasyJet made record fourth quarter underlying profit of £674m
- Nearly 70 million people have flown with the airline, up from just 20.4 million last year
- Sales were impacted by Covid-19 Omicron variant and airport disruption
EasyJet’s annual losses have shrunk by 80% after the airline posted a record fourth quarter underlying profit of £674m.
The group recorded pre-tax losses of £169m in the 12 months to September, compared to £858m the year before, as it continued to battle higher costs and a rebound lower than expected in the number of passengers.
Nearly 70 million people traveled with the air carrier during the period, compared to 20.4 million last year, when heavy Covid-19 restrictions severely depressed demand for overseas travel.
Recovery: The low-cost airline revealed that reported pre-tax losses fell to £169m in the 12 months to September, from £858m the year before
As a result, total revenue nearly quadrupled to £5.8 billion, with the group’s performance supported by considerable growth in its package travel business and revenue per passenger increasing by a third at constant exchange rates.
However, EasyJet was unable to post a profit as the ramp-up in capacity led to soaring costs, particularly for fuel, the price of which was boosted by the easing of pandemic-related curbs and the war in Ukraine.
The emergence of the Covid Omicron variant, which led to the reimposition of travel restrictions, and airport disruptions over the Easter period also weighed on sales.
Widespread staff shortages have left airlines struggling to cope with the resurgence in passenger numbers earlier this year, causing massive delays and flight cancellations for millions of holidaymakers.
EasyJet said the disruption eased after it cut capacity and major travel hubs like London Gatwick and Amsterdam Schiphol implemented daily passenger limits, although it cost the group £78million compared to 2019 levels.
Nonetheless, the FTSE 250 said it started the current financial year with “one of the strongest balance sheets in European aviation” and noted that the number of bookings for the Christmas and Easter holidays was quite high.
Optimism: “EasyJet does well in difficult times. Legacy carriers will struggle in this high cost environment,’ chief executive Johan Lundgren (pictured) remarked
For the first half of the period, the company forecasts a 25% increase in capacity volumes, followed by a 9% increase over the following six months, with fourth quarter capacity at pre-pandemic volumes.
Johan Lundgren, Managing Director of EasyJet, said: “EasyJet does well in difficult times. Legacy carriers will struggle in this high-cost environment.
“Consumers will protect their holidays but will be looking for value, and on its main airport network easyJet will be the beneficiary as customers vote with their wallets.”
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Demand appears resilient, despite the obvious cost of living pressures.”
“Jet-setters spend whatever money they have on traveling, chasing the winter sun, or climbing the mountains to put on their best ski gear.
“It’s hard to judge how long this willingness to keep spending will last, but with easyJet feeling positive for spring next year, it looks like holidays could be one of the last areas where spending will reign supreme. ”
EasyJet shares were down 4.5% or 17.6p, down to 375.4p late Tuesday morning, meaning their value has fallen 29% since the start of this year.