- EasyJet expects full-year profit to top expectations
- Losses narrow in first quarter
- Growth expectations for package holidays arm upgraded
A strong update from EasyJet (EZJ) helped its shares take off and suggested that despite cost-of-living pressures people are still willing to prioritise their week in the sun.
The company said it expected full-year performance to beat expectations after seeing pre-tax losses for its first quarter to 31 December narrow from £213 million to £133 million year-on-year with revenue up 83% to £1.47 billion.
Passenger numbers were up 47% year-on-year and its load factor (essentially how full its planes are) was up from 77% to 87%. Currently forecast to make a profit of £126 million, it now anticipates topping this as it heads for its first year of profitability post-Covid. In its September 2019 financial year it made a profit of £440 million.
Investors were impressed, marking the shares 10.4% higher to 516.6p. This is not the first rally in the shares since 2020 but, ultimately, they have struggled to sustain a meaningful recovery from their pandemic lows.
HOLIDAYS ARM IS DOING REALLY WELL
The company’s confidence in its recently launched package holidays venture was also notable with the previously anticipated customer growth of 30%-plus upgraded to around 50%.
Edison executive director Neil Shah commented: ‘With the cost of living and dreary weather prompting customers to prioritise spending on European summer holidays, bookings to southern Spain and the Greek islands saw record breaking sales revenue in recent weekends, giving hope to the aviation sector aiming towards 2019 traffic levels.’
AJ Bell investment director Russ Mould said: ‘Even though EasyJet remains loss-making, there is clear evidence it is very much on the road to recovery. Bookings remain strong, the package holidays operation is doing better than expected and it continues to find ways to boost revenue beyond the price of a ticket.
‘Many consumers still have the appetite and the means to spend money on experiences, despite the prospect of recession. People work hard and they want to give themselves a treat, meaning a foreign holiday remains high on the list of things people are prepared to pay for. If it means cutting back elsewhere to have the holiday, so be it.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Tom Sieber) and the editor (James Crux) own shares in AJ Bell.
