EasyJet losses narrow to £169m on relaxation of travel restrictions as airline pins profit hopes on 2023
- EasyJet achieved record underlying earnings of £674m in the fourth quarter
- Nearly 70m people flew with the air carrier, compared to just 20.4m last year
- The Covid-19 Omicron variant, as well as airport disruptions, had a negative impact on sales
EasyJet annual losses have narrowed by 80 per cent after the airline posted record underlying earnings of £674million in the fourth quarter.
The group reported pre-tax losses of £169million in the 12 months ending September, against £858million the previous year, as it continued to battle higher costs and a weaker-than-expected rebound in passenger numbers.
The airline carried nearly 70 million passengers during the period. This is compared to 20.4million last year, when Covid-19 restrictions severely impacted demand for travel overseas.
Recovery: The budget airline revealed reported pre-tax losses plummeted to £169million in the 12 months ending September, against £858million the previous year
Total turnover climbed almost fourfold to £5.8billion as a result, with the group’s performance buoyed by considerable growth in its package holidays business and per passenger revenue rising by a third at constant currency levels.
EasyJet couldn’t make a profit due to rising fuel costs and increased capacity. This has been exacerbated by the war in Ukraine and loosening of pandemic-related restrictions.
Sales suffered from the Covid Omicron variant’s emergence, which resulted in travel restrictions being reimposed, as well as disruption at airports during Easter.
Airline staff shortages made it difficult for airlines to manage the increase in passenger volumes. This led to massive delays and cancellations that affected millions of holidaymakers.
EasyJet said this disruption subsided after it reduced capacity and major travel hubs like London Gatwick and Amsterdam Schiphol put daily passenger limits in place, though it cost the group £78million against 2019 levels.
Nevertheless, the FTSE 250 company stated that it started the current financial year with a’strong balance sheet in European aviation’. It also noted that the bookings for Christmas and Easter holidays were quite high.
Optimism: EasyJet is a great company in difficult times. Johan Lundgren, chief executive of EasyJet (pictured), stated that legacy carriers would struggle in this high-cost environment.
The firm projects a 25% increase in capacity volumes for the first half, followed by a 9 percent rise in the six subsequent months. Fourth-quarter capacity will be at pre-pandemic levels.
Johan Lundgren is EasyJet’s chief Executive Officer. He said, “EasyJet thrives in difficult times.” In this high-cost environment, legacy carriers will struggle.
“Consumers will protect holidays but seek value. EasyJet’s primary airport network will be its beneficiary. Customers will vote with their wallets.
Hargreaves Lansdown equity analyst Matt Britzman said that demand looks resilient, despite obvious costs of living.
“Jet setters” spend their money on travel, skiing and winter sun.
It is not clear how long this desire to continue spending will last, but easyJet is optimistic about next spring and believes holidays could be the last place where spending reigns in.
EasyJet shares were 4.5 per cent, or 17.6p, down at 375.4p on late Tuesday morning, meaning their value has fallen by 29 per cent since the start of this year.