EasyJet losses tumble 80% following relaxation of travel curbs

EasyJet’s annual losses have fallen by 80 per cent after the airline posted a record fourth-quarter underlying revenue of £674 million.

The group reported a pre-tax loss of £169m in the 12 months ended September, up from £858m last year as it continued to battle higher costs and a weaker than expected recovery in passenger numbers.

Nearly 70 million people flew with the airline during that period, compared to 20.4 million last year when heavy Covid-19 restrictions severely depressed demand for overseas travel.

Total turnover almost quadrupled as a result to £5.8 billion, with the group’s performance supported by significant growth in the package travel business and revenue per passenger increasing by a third at constant exchange rates.

EasyJet was unable to make a profit, however, as the capacity expansion led to rising costs, particularly for fuel, the price of which has been driven up by the easing of pandemic-related curbs and the war in Ukraine.

The emergence of the Covid Omicron variant, which led to the reimposition of travel restrictions, and disruptions at airports over the Easter period also weighed on sales.

Widespread staff shortages meant airlines struggled to cope with the resurgence in passenger numbers earlier this year, leading to massive flight delays and cancellations for millions of holidaymakers.

EasyJet said this disruption eased after it reduced capacity and major travel hubs such as London Gatwick and Amsterdam Schiphol introduced daily passenger limits, even though it cost the group £78m compared to 2019.

Nevertheless, the FTSE 250 company said it started the current financial year with “one of the strongest balance sheets in European aviation” and noted that booking figures for the Christmas and Easter holidays are quite high.

Optimism: ‘EasyJet is doing well in difficult times. Legacy airlines will struggle in this high cost environment,” said CEO Johan Lundgren (pictured)

For the first half of the period, the company forecasts a 25 percent increase in capacity volumes, followed by a 9 percent increase over the next six months, with fourth-quarter capacity at pre-pandemic volumes.

Johan Lundgren, CEO of EasyJet, commented: ‘EasyJet is doing well in difficult times. Older carriers will struggle in this high cost environment.

“Consumers will protect their holidays but look for value and on the primary airport network easyJet will be the beneficiary as customers vote with their wallets.”

Matt Britzman, an equity analyst at Hargreaves Lansdown, said: ‘Demand appears to be resilient, despite clear cost-of-living pressures.

“Jetsetters splash with all the money they have on travel, hunt for some winter sun or hit the mountains to put on their best ski outfits.

“How long this willingness to spend will last is hard to judge, but with easyJet feeling positive about spring next year, it seems that holidays could be one of the last areas where spending takes over.”

EasyJet shares were down 4.5 percent, or 17.6 pence, to 375.4 p late Tuesday morning, meaning their value is down 29 percent since the start of this year.