Budget airline easyJet has hiked its full-year profit outlook after trimming losses in its first quarter and cheering a record surge in bookings since the start of the year (Gareth Fuller/PA)
(Picture: PA Archive)EASYJET shares jumped 10% today after the budget airline forecast a return to profit as customers set aside cost-of-living pressures and book foreign holidays at record levels.
The company recorded losses of more than £1 billion in 2020 and 2021 as Covid restrictions devastated airlines.
Today it said it should return to profit this year and that the number of planes in the air should reach pre-pandemic levels by the summer.
That’s the latest sign that the UK consumer may be feeling more confident than gloomy economic forecasts suggest.
The shares rose 48p to 516p. In particular, the City was pleased that Easyjet Holidays, a recent launch, is paying off with profits of £31 million compared to a £1 million last year.
Chief executive Johan Lundgren said Britons are making holiday spending a priority with “strong and sustained” demand for travel.
This month saw three record-breaking weekends for sales. Easyjet filled five airlines every minute during peak hours and thinks the summer will be strong.
In the last three months easyJet made a loss of £133 million.
Those losses are much better than the £213 million incurred last time – the travel trade generally losses money in the winter months.
Passenger numbers are up 47% on a year ago. A fall in fuel costs has helped keep the price of flights lower.
CEO Johan Lundgren said: “Customers are looking for value, which easyjet can provide.” More than half of its flights are on sale.
The company is “firmly on the path” to a full-year profit that should be well ahead of City forecasts of £126 million.
Dimitris Hiotis at global consultancy Simon-Kucher & Partners, said: “Despite the economic concerns and the cost of living crisis, holidays seem to be holding on in terms of demand, as people are not yet ready to ditch their summer holiday for 2023; that can only be encouraging news for Easyjet and the wider sector.”
Michael O’Leary, the boss of arch rival Ryanair, has said that WizzAir and easyJet would have to merge to survive. Wizz Air did indeed launch an audacious, if speculative bid, which easyJet dismissed.
Lundgren said today he was “never a big believer than we will see big M&A transactions” in the sector.
Sophie Lund-Yates at Hargreaves Lansdown said: “EasyJet has shown how a post-pandemic recovery is done. Its superior proposition means its planes are at the right airports, with the right routes, to capture demand as holidaymakers return to the skies in force. Offering a better service also feeds into easyJet’s astounding ability to sell extras to existing customers. Ancillary revenue, like extra legroom, food and baggage is rising and now makes up 28% of overall revenue. These add-ons are highly lucrative and suggest holiday makers are going all-out after years of disrupted travel.”
Last week Ryanair also said it had seen record bookings of late.
