EasyJet sees return to capacity next summer despite inflation crisis

Early bookings for the second half starting April “look positive”, with ticket prices and occupancy for Easter stronger than a year ago

Tue, 29 Nov, 2022 - 16:03

Clara Hernanz Lizarraga

EasyJet has said enduring demand for discounted flights should allow it to return to pre-pandemic levels of capacity by next summer, even as soaring inflation weighs on household incomes.

Early bookings for the second half starting April “look positive”, with ticket prices and occupancy for Easter stronger than a year ago, EasyJet said. At the same time, the company reiterated that it has very low visibility into next year.

“Outside the peak period it’s fair to say there is a need to stimulate the market,” chief executive Johan Lundgren said during a call with journalists.

“It’s normal seasonality in this point in time,” he said.

Low-cost airlines like EasyJet are lifting capacity just as economies slow, in a bet that Europeans will continue to prioritise affordable leisure travel over other discretionary spending. The carrier said that should help it lure more customers and grow margins while keeping a lid on costs.

Staff recruitment

The airline said it will begin summer recruitment early to avoid a repeat of 2022’s industry-wide staff shortages.

So far, the company has received 19,000 applications for the 2,000 cabin-crew positions it is seeking to fill, Mr Lundgren said. EasyJet is also planning to expand its campaign to recruit adults over the age of 45 to other countries other than the UK.

EasyJet shares fell 3.5% in London trade as the carrier added to the chorus of discount airlines determined to press on with restoring capacity after the coronavirus pandemic, despite a weakening European economy and recession in its home UK market.

Following a bumper summer, EasyJet narrowed its headline pretax loss for the year to the end of September to £178m (€206m), after saying last month that the figure was between £170m and £190m.

Peak holiday periods this winter, including Christmas week in the UK, are back to normal levels of volume.

Yields, or fares, are up around 18% from a year ago, when the Omicron variant of Covid-19 stalled a rebound from the pandemic. Visibility over bookings in the second half remains low, however.

EasyJet plans to offer 38 million seats in the first half of the year and 56 million in the second, reaching pre-pandemic levels in the fourth quarter starting in July.

Davy analysts said there were no incremental positive surprises since its last update in October, while Citi analysts said easyJet's outlook reflected "softer pricing comments versus peers".

Ryanair, Europe's biggest airline and a low-cost competitor for EasyJet, had earlier this month said November and December bookings were strong and it expected robust traffic and average fare growth over the next 18 months at least.

EasyJet said the airline industry is facing higher fuel costs, a stronger dollar, and wage inflation, while Mr Lundgren stressed the need to keep fares attractive even as it tries to recover as much of the possible rises.