EasyJet has insisted that cash-strapped Britons will not abandon their holidays abroad in the face of rising food and energy bills, as the low-cost airline pared its annual losses after a record performance in the summer.
The budget airline reported underlying pre-tax losses of £178m for the 12 months to 30 September against losses of £1.1bn a year earlier. The group said it had made its best single-quarter earnings over the summer, at £674m on an underlying basis, as the end of pandemic travel restrictions put overseas holidays firmly back in the agenda.
Chief Executive Johan Lundgren said consumers will prioritize holidays as they come under pressure from rising inflation, adding that bookings for next spring and summer already look positive. But the airline warned of cost increases “across the market” and said its fuel spend in the first half of the year would be more than 50 percent higher year-on-year due to inflationary pressures.
EasyJet is raising ticket prices in response, with prices looking “robust” for next Easter, though it hopes its cheap offer will help it weather the cost-of-living crisis. Lundgren said: “EasyJet does well in tough times. Legacy carriers will struggle in this high-cost environment. Consumers will protect their holidays but seek value, and at its core airport network, easyJet will be the beneficiary when customers vote with their wallets.”
The group remained in the red over the past year as it was hit with an additional £78m in disruption and compensation costs caused by travel chaos over the summer as flights were delayed and canceled due to to the shortage of personnel in its operations and in the airports. This masked a record last quarter, with its flight schedule back to pre-Covid levels, helping full-year passenger numbers rise 242 percent to 69.7 million in the prior year affected by the pandemic.
The group said it had already begun recruiting for next summer to help avoid the disruption seen in 2022. It recently launched a cabin crew recruitment campaign targeting those 45 and older to boost its workforce. Lundgren said he had received a “phenomenal” response with a 75 per cent daily increase in requests, adding that the group would look to extend the campaign outside the UK.
Ben Laidler, global markets strategist at social investment network eToro, said: “We expect EasyJet to continue to report revenue and profit growth as we enter 2023, but we expect rising costs and a tight job market to affect expansion.” and profitability. While airlines cover their fuel costs, the average cost of fuel per seat has risen 19 percent over the past year, and prices could remain high unless there is an abrupt and orderly end to the war in Ukraine.”
Matt Britzman, equity analyst at investment platform Hargreaves Lansdown, noted: “Final earnings are still a bit out of reach. Ultimately, there are a number of factors outside of EasyJet’s control, but a strong balance sheet position and targeted moves into new growth areas, such as EasyJet vacations, put the group in a decent position.”