- EasyJet holidays shine with £86 million pre-tax profit
- Hit from industrial action and fuel costs
- Year-to-date shares down 12%
Shares in EasyJet (EZJ) fell more than 6% to 489p in morning trading despite the low-budget airline reporting a strong set of third-quarter results.
The company reported a pre-tax profit of £286 million for the third quarter ending 30 June - an improvement of £50 million year-on-year and in line with expectations.
EasyJet holidays put in a robust performance with a pre-tax profit of £86 million, up £13 million year-on-year. New medium-term targets for the group as a whole will be set at the end of the current financial year which runs to 30 September.
Bookings for the fourth quarter are also 67% sold following last year’s record summer and customers are leaving it later to book, affecting visibility
Investors also seemed concerned about the scale of industrial action by the French ATC (air traffic control) and the impact of recent higher fuel costs on profit.
WHAT DID THE CEO SAY?
EasyJet CEO Kenton Jarvis said: ‘We performed well in the quarter, increasing profits alongside improving operational performance which has boosted EasyJet’s customer satisfaction scores, and we continued to see strong demand from our customers.
‘We are extremely unhappy with the strike action by the French ATC in early July, which as well as presenting unacceptable challenges for customers and crew also created unexpected and significant costs for all airlines.
‘EasyJet holidays remains on track to deliver more than £235 million of profits for the full year and we see a positive outlook for the group for full year 2025 and beyond, as we continue to focus on progressing towards our medium-term targets.’
FACING HEADWINDS
Dan Coatsworth, AJ Bell investment analyst said: ‘For now, passenger numbers are solid, but people are leaving it longer to book and are more price-driven than before thanks to economic uncertainty.
‘As a result, EasyJet remains reliant on late summer bookings to fill unsold seats, and the market will be weighing the risk that last-minute demand does not come through at the level necessary to get flights close to capacity.
‘This headwind is being compounded by an increase in fuel costs and the impact of French strike action, with these factors prompting downgrades to earnings estimates.
‘On the flipside, investors will be reassured that the heightened tensions in the Middle East only seemed to have a passing impact on demand. The company’s foray into package holidays, which began in 2019, also seems to be paying off nicely based on the increase in guidance for this part of the business.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Tom Sieber) own shares in AJ Bell.
