Low-cost airline EasyJet (EZJ) on Tuesday talked up improving demand from passengers and overall better trading, but investors were left disappointed at the pace of recovery.
In an update for the year to 30 September, the budget carrier said it now expected capacity to hit 70% of 2019 levels in the three months to 31 December as it battles back from a pandemic battering. That implies that EasyJet believes it will fly around 15.5 million passengers during the current quarter - it flew 22.2 million in the 31 December 2019 period.
EasyJet said travel within Europe led demand during the summer, but after the UK government relaxed restrictions and testing there has been an uptick in the UK too. Bookings for the first half of the current financial year have doubled compared to the same period last year.
This does not appear to have impressed investors who marked the stock 2.5% lower to 631.4p, a far cry from the 930p levels reached earlier this year.
PREDICTABLY BLEAK YEAR
In the year ended 30 September, the budget carrier expects pre-tax losses to soar beyond £1 billion (between £1.13 million and £1.17 billion). Consensus of analyst forecasts is currently pitched at £1.17 billion, based on Refinitiv data.
During the fourth quarter, EasyJet flew 17.3 million passengers at 58% of 2019 capacity, with strong performance on intra-European and UK domestic routes, while demand for trips outside the UK was hit by ‘onerous and expensive travel restrictions’ imposed by Westminster.
Total quarterly revenue is expected to come in at £1 billion with costs of £1.1 billion, after the firm delivered £510 million of operational savings.
Net debt at period-end was cut to £900 million but only after a controversial £1.2 billion rights issue.
Last month the airline revealed that it had rejected a potential takeover offer, believed to have come from rival discount flyer Wizz Air (WIZZ), although few details were given.
JET FUEL COSTS SURGE
With fuel prices going through the roof, EasyJet reported that 55% of its estimated requirements for this year to September 2022 have been hedged, relieving some of the pricing pressure. It said fuel had been hedged at $500 per metric tonne while the spot price on Monday was $760.
A surge in October bookings to the Canary Islands pushed capacity up 140% on 2019, while signs of a rebound in business trips and city breaks have also started to emerge.
