Easyjet slashes losses as demand returns
Easyjet has insisted cashstrappedbritonswillnotditch their overseas holidays in the face of soaring food and energy bills as the low-cost carrier slashed its annual losses following a record summer performance.
The budget airline reported underlying pre-tax losses of £178 million for the 12 months to September 30 against losses of £1.1 billion a year earlier.
The group said it had notched up its best earnings for a single quarter over the summer, at £674m on an underlying basis, as the ending of pandemic travel restrictions put overseas holidays firmly back on the agenda.
Chief executive Johan Lundgren said consumers will prioritise holidays as they come under pressure from soaring inflation, adding that bookings for next spring and summer are already looking positive. But the carrier cautioned over “market-wide” cost increases and said its first-half fuel expense was set to be more than 50 per cent higher yearon-year due to inflationary pressures.
Easyjet is hiking ticket prices in response, with prices looking “strong” for next Easter, though it hopes its budget offering will help it weather the cost-of-living crisis. Lundgren said: “Easyjet does well in tough times. Legacy carriers will struggle in this highcost environment. Consumers
will protect their holidays but look for value, and across its primary airport network, easyjet will be the beneficiary as customers vote with their wallets.”
The group remained in the red over the past year as it was hit by an extra £78m in disruption and compensation costs caused by the travel chaos over the summer as flights were delayed and cancelled due to staff shortages across its operations and at airports. This masked a record-breaking final quarter, with its flight programme back to around pre-covid levels, which helped full-year passenger numbers jump 242 per cent to 69.7 million on the pandemic-hit previous year.
The group said it had already started recruiting for next summer to help avoid the disruption seen in 2022. It recently launched a cabin crew recruitment campaign focused on the over-45s to boost its workforce. Lundgren said it had received a “phenomenal” response with applications up 75 per cent on a daily basis, adding that the group would look to extend the campaign outside the UK.
Ben Laidler, global markets strategist at social investing network etoro, said: “We expect Easyjet to continue to report bottom and top-line growth as we enter 2023, but we expect rising costs and a tight labour market to weigh on expansion and profitability. While airlines hedge their fuel costs, the average cost of fuel per seat has increased 19 per cent over the past year, and prices could remain high unless there is a sharp and orderly end to the war in Ukraine.”
Matt Britzman, equity analyst at investment platform Hargreaves Lansdown, noted: “Bottom-line profits remain a little out of reach. Ultimately, there’s a host of factors outside Easyjet’s control, but a strong balance sheet position and targeted moves into new growth areas like Easyjet holidays put the group in a decent position.”