Airline shares take off as easyJet boosts profit forecasts

EasyJet’s annual revenues will beat current forecasts after a rebound in winter bookings, the group said Tuesday, sparking a rally in airline stocks.

The budget airline now expects pre-tax profit to exceed £126m for the 12 months ending September 2023, after posting a £183m loss last year amid Covid-related restrictions and widespread cancellations.

For the three months ended December, the company said total pre-tax losses fell by £80m to £133m as passenger and ancillary revenues both rose more than 75 per cent.

EasyJet shares surged 9.6 per cent to 512.8 pence on Wednesday morning, making them the second-highest riser in the FTSE 350 after media firm Ascential Group.

Since the start of 2023, the company’s shares are up 57 percent in value, more than 11 times the 4.6 percent gain of the FTSE 250 Index.

Other airlines saw their share prices boosted today by easyJet’s results Jet2 Shares jumped 4.7 percent, Wizz Air rising 4.6 percent, and owner of British Airways International Airlines Gr growth of 1.8 percent.

Some 5.6 million more customers traveled with easyJet than during the same period in 2021, when the emergence of the Omicron variant led governments to reintroduce cross-border travel restrictions.

This helped boost overall load factors — the number of seats filled by an airline’s planes — to 87 percent, about four percentage points below pre-pandemic volume.

Although easyJet posted losses due to higher fuel costs and short-term aircraft leasing, the company expects losses in the first half to be “significantly better” than last year.

Chief executive Johan Lundgren said the smaller winter loss would put us “solidly on track to deliver a full year profit, expecting to exceed current market expectations, enabling us to create value for customers, investors and the economies we serve.”

He noted that the group had had three of its best sales weekends since early January, filling five planes per minute at peak times.

For the coming months, easyJet said Easter demand was “handling very well at the moment”, with tickets sold almost 25 per cent up on 2019, while summer package sales were up more than 60 per cent.

Richard Hunter, Head of Markets at Interactive Investor, said: ‘Despite the inevitable economic clouds, such as a cost-of-living crisis that could jeopardize consumer spending and rising costs, easyJet’s offering is currently bearing fruit.

The cheap fares come with primary airports as destinations, unlike some of its low cost competitors which fly to less central and therefore less convenient destinations.

“It is also in planning mode for the upcoming busy period and we hope to learn lessons from last year when operational capacity was put to the full test as passenger demand recovered at a pace some could not cope with.”

Due to staff shortages during the spring and summer of last year, the airline struggled to cope with the extraordinary rebound in passenger numbers, which resulted in numerous flights being canceled or severely delayed.

To avoid future disruptions, it has launched a recruitment campaign – called “Empty Nesters take flight!” – aimed at convincing people over the age of 45 to become cabin crew.