EasyJet swings to annual profit but sees hit from Gaza conflict

28/11/2023

EasyJet swings to annual profit, but sees hit from Gaza conflict

Budget airline easyJet has revealed it swung to an annual profit after a record summer, but warned over a hit from the conflict in Gaza.

The group reported pre-tax profits of £432 million for the year to September 30, against losses of £208 million the previous year, seeing the group announce its first dividend payout to shareholders since the pandemic.

Underlying, or headline, profits stood at £455 million against a £178 million loss in 2021-22.

A record-breaking performance over its second half and the peak summer season helped it shrug off a 30% jump in its costs, with its fuel bill soaring by 59% to £2 billion over the year.

It warned that it does not expect to narrow losses in the first quarter of its new financial year as flights and wider demand are affected by the war between Hamas and Israel.

Its flights to Israel and Jordan are temporarily suspended, with Egypt also seeing a knock-on effect – altogether representing a combined 4% of its overall flight programme.

EasyJet said: “Additionally there was a broader impact on near-term flight searches and bookings across the industry, though this seems to be coming back with a recent improvement in trading.

“Accordingly, despite positive underlying strength, easyJet does not currently expect its first-quarter loss to improve year on year.”

Despite the woes in the Middle East, easyJet said the outlook for the new year as a whole is “positive” thanks to strong bookings for next summer, despite the Middle East concerns, and supply constraints in Europe.

The group resumed its dividends with a 4.5p-a-share payout due in early 2024 and confirmed it expects to increase this to 20% of profit after tax.

Shares in the carrier lifted 3% in morning trading on Tuesday.

EasyJet saw a 19% rise in the number of passengers flown over the year, to 82.8 million, as demand bounced back in the first full year with no Covid travel restrictions since 2019.

It notched up its highest-ever underlying earnings in its final quarter, with revenues of more than £1 billion in July and August for the first time.

This was also helped by higher air fares, as well as greater revenues from extras added on to tickets.

The group said its average fares increased by £9 to £72 over the past year.

Chief executive Johan Lundgren said it is too early to predict what will happen with fares over the current year, but said around 60% of its fares are available for less than £50.

But the group has seen higher revenues per seat continue into the new financial year – up 12% in October – in a sign of ongoing fare pressure.

EasyJet said the performance was delivered despite disruption from air traffic control (ATC) strikes, as well as the UK ATC system glitch at the end of August.

It said that in March alone only five days were unaffected by strike action.

Mr Lundgren said: “We see a positive outlook for this year, with airline and holidays bookings both ahead year on year, and recent consumer research highlights that around three-quarters of Britons plan to spend more on their holidays versus last year, with travel continuing to be the top priority for household discretionary spending.”

He cheered Virgin Atlantic’s move to operate the first large passenger transatlantic flight using pure sustainable aviation fuel (Saf).

Virgin Atlantic will operate the flight to New York JFK with a Boeing 787 Dreamliner aircraft on Tuesday.

“Congratulations to Virgin Atlantic for this,” Mr Lundgren said.

He added that Saf is “part of our roadmap to net zero”, alongside hydrogen technology.

Published: by Radio NewsHub



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