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

Easyjet posted a third year in the red, despite a ‘record backlash’ over the summer after pandemic restrictions were eased.

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

But CEO Johan Lundgren predicted it would trump rivals in the coming months as the cost of living squeezes and bookings for winter holidays return to pre-Covid levels.

“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 if customers vote with their wallets.”

Full year performance was dented by Omicron, the war in Ukraine and disruption as travel demand returned.

It booked £205 million in compensation costs following cancellations and delays caused by staff shortages.

But an underlying measure of revenue over the summer was £674 million, the best ever, with planes at 92 per cent full.

Lundgren praised a “billion pound recovery”. For the year, revenue nearly quadrupled to £5.77 billion, while passenger numbers rose from 20.4 million to 69.7 million.

Lundgren said: ‘Easyjet achieved a record setback this summer with a performance that underscores that our transformation is paying off.’

He was optimistic about the year ahead, despite strains on consumer finances and cost pressures, with fuel prices about 50 percent higher than last year.

Rising wages and a stronger dollar are also taking their toll. “Easyjet is doing well in tough times,” Lundgren said, adding that he believed old national airlines with billions of pounds in debt would struggle.

He said Easyjet would benefit from cost-conscious holidaymakers ‘climbing towards value’.

Bookings for peak periods this winter, such as the spring break in October and the Christmas week, were back at normal levels.

Its “returns” on those sales – a measure of profit – grew stronger as it tries to recoup some of its higher costs through more expensive tickets.

But the airline still needs to boost off-peak demand with attractive pricing agreements.

It also sees fuller planes and higher yields ahead of Easter, but said it was too early to assess the outlook for next summer.

Lundgren said there was strong demand for destinations in Turkey, Egypt and Greece. He expressed confidence in Easyjet’s growth prospects – and did not rule out taking over struggling rivals.

He said, “There will be a number of airlines that will struggle… and not have the resources to go through uncertainty.” But he is skeptical about a wave of European consolidation.

Analysts expect Easyjet to return to profit next year. But experts at Citi said his comments on pricing were “softer” than those of rivals. Liberum’s Gerald Khoo said capacity guidelines were “slightly more cautious” than expected.

Shares fell 2.6 percent, or 10.1 pence, to 382.9 pence, and is down 38 percent year-to-date.