SHARE OF THE WEEK: EasyJet prepares to reveal full year update
The travel industry enjoyed a great summer and demand for holidays remains strong as we head into autumn and winter.
But that hasn’t been reflected in airline share prices, with Easyjet and British Airways owner IAG both around 65 per cent below pre-pandemic levels despite profits so far. anus.
Investors will therefore be hoping for a change of fortune when Easyjet publishes its full-year trading update on Thursday. The airline racked up record profits of £203m in the third quarter of the year (the three months to the end of June) and more of the same is expected for the final quarter.
Revenue per seat, a key metric for the industry, is expected to increase 10 percent.
According to analysis by brokerage AJ Bell, this should leave Easyjet with annual sales of £8.2bn, a year-on-year increase of 42 per cent. Profits are expected to reach £450m after three years of losses.
A report by Russ Mold of AJ Bell and Danni Hewson notes that “of equal interest” will be any profit forecast for the new financial year. However, they warn that this may not happen until Easyjet publishes its full results in November.
Analysts forecast profits of £552m for the 12 months to the end of September 2024, although they are still below 2015’s all-time high of £686m. While demand for air travel remains high, the recent rise in oil prices (before this week’s drop) has raised the cost of fuel and household budgets remain under pressure.
Against this backdrop, Hargreaves Lansdown’s Sophie Lund-Yates said the city will want to know “what the bookings boost looks like as we head into the new financial year”.
He added: “With cost-of-living pressures still alive and well, analysts will wonder how much time remains for the travel sector’s resilience.”