Economy

Holiday boom boosts Easyjet: Budget airline enjoys record bounce-back

Easyjet enjoys holiday boom after suffering third consecutive year of losses

Easyjet racked up a third year in the red despite enjoying a ‘record bounce-back’ over the summer after pandemic restrictions eased.

The budget airline reported a loss of £178million for the year to the end of September, after a £1.14billion shortfall in 2021 and a loss of £835million in 2020.

Johan Lundgren, the chief executive, predicted that it would outmuscle its rivals in months ahead as the cost-of-living squeeze bites. Winter holiday bookings are back at pre–Covid levels.

Record bounce-back: Easyjet Chief Executive Johan Lundgren predicted that it would beat rivals in the coming months as the cost of living rises

‘We see strong demand for Christmas, for new year, for the ski season’, he said. ‘Consumers will protect their holidays but look for value and Easyjet will be the beneficiary as customers vote with their wallets.’

Omicron, disruptions as travel demand returned and the war in Ukraine impacted the full-year bottom line.

It notched up £205million of compensation costs following cancellations and delays caused by staff shortages. 

But an underlying measure of earnings over the summer hit £674million, its best ever, with planes 92 per cent full.

Lundgren hailed a ‘billion-pound recovery’. For the year, revenues rose nearly fourfold to £5.77billion while passenger numbers climbed from 20.4m to 69.7m.

Lundgren said: ‘Easyjet has achieved a record bounce-back this summer with a performance which underlines that our transformation is delivering.’

He was bullish about the year ahead despite a squeeze on consumers’ finances and pressure on its costs, with fuel prices around 50 per cent higher than last year.

Rising wages and a stronger Dollar are also taking their toll. ‘Easyjet does well in tough times,’ Lundgren said, adding that he believed legacy flag carriers loaded with billions of pounds of debt would struggle. 

He said Easyjet stood to benefit as cost-conscious holidaymakers ‘gravitate towards value’.

The normal level of bookings for peak periods in winter such as the October half-term or Christmas week was restored. 

‘Yields’ on those sales – a measure of profit – were strengthening as it seeks to recover some of its higher costs through pricier tickets.

However, the airline must still increase demand during off-peak hours by offering attractive price deals.

It is also reporting higher yields and fuller planes for Easter, but it was too early to predict the future.

Lundgren stated that there is strong demand for destinations such as Turkey, Egypt, and Greece. He expressed confidence in Easyjet’s growth outlook – 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 resource to go through uncertainty.’ But he has been sceptical about a Europe-wide wave of consolidation.

Analysts predict Easyjet will return to profit next fiscal year. But experts at Citi said its comments on prices were ‘softer’ than rivals. Liberum’s Gerald Khoo said guidance on capacity was ‘slightly more cautious’ than expected.

Shares These prices were 38.9% lower for the year, falling 2.6 percent, or 10.1p.

Job applications are on the rise 

Easyjet received 19,000 applications to fill 2,000 cabin crew positions for next summer.

The carrier is trying not to repeat the chaos that ravaged the aviation industry in 2009 after holiday demand surged following the removal of pandemic restrictions.

It started preparing for 2023 in the summer of this year, two months earlier than usual. Johan Lundgren, chief executive, stated that 1,500 employees had been hired. However workers are scarce around Gatwick’s hub.

‘We have a huge amount of applications from northern parts of the UK so of course you could have people that work in Gatwick – but that’s not the plan at this moment.’

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Jacky

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