easyJet’s share price rose on Wednesday as the budget airline announced narrowing losses despite problems on its Middle Eastern routes.
At 531p per share, the FTSE 250 company was 4.5% higher in midweek trading.
Revenues ticked 22% higher during the final three months of 2023, easyJet said, to £1.8 billion. This meant pre-tax losses narrowed slightly to £126 million from £133 million in the same 2022 period.
Passenger revenues rose 16%, to £1.1 billion, as traveller numbers improved to 19.8 million. Ancillary revenues increased 20% to £486 million.
Meanwhile, sales at the easyJet Holidays package holiday unit surged 95% year on year, to £181 million, as customer numbers increased 48%.
However, easyJet said it had taken a £40 million hit from the geopolitical crisis in the Middle East. The business has paused flights to Israel and Jordan following the outbreak of hostilities on 7 October.
Fuel costs at the business rose 31% over the first quarter, to £531 million.
Summer Bookings Build
Despite those problems in the Middle East, easyJet said that it expects losses to narrow during the first half of its financial year. The business booked losses of £411 million for the corresponding 2022/2023 period.
It also predicted that revenues per seat (RPS) — which rose 3% in the first quarter — to increase by “mid-single digits.”
Looking further ahead, easyJet noted that “bookings for summer 2024 are building well, with the turn of the year bookings period showing an increase in both volume and pricing compared to the same period last year.”
It added that RPS for the second half “remain well ahead” versus the corresponding 2022 period. Over the full financial year, customer numbers at easyJet Holidays are tipped to increase 35%.
“Improved Performance”
Chief executive Johan Lundgren commented that “we delivered an improved performance in the quarter which is testament to the strength of demand for our brand and network.”
He added that “we see positive booking momentum for summer 2024 with travel remaining a priority for consumers. Flight and holidays bookings took off strongly during the traditional busy turn of year sales period, as customers opted to secure their summer holidays.”
“Positive Upward Trajectory”
Neil Shah, analyst at Edison Group said that “today’s figures reflect a positive upward trajectory for easyJet,” noting that “since late November, there’s been a significant recovery in demand and bookings.”
He added that “easyJet anticipates disciplined capacity growth of about 9% in the 2024 financial year, underpinning a positive outlook for the summer season and the remainder of the financial year.”
Analyst Sophie Lund-Yates of Hargreaves Lansdown said that “summer bookings look robust in a sign that travel remains a priority for consumers.” However, she added that “there is some uncertainty about how long these trends can hold.”
She commented that “lower earners have run out of road when it comes to trimming costs amid cost of living pressures,” though she added that “higher earners have seen their financial resilience improve over the last couple of years.”
These changing circumstances create “an unknown for the likes of tourism stocks,” Lund-Yates said.