EasyJet upbeat on annual profits due to strong travel demand

EasyJet raised its profits target for a second time this year, pointing to higher fares at many airlines in the coming months. 

Easyjet s benefiting from rebounding demand for summer travel.

EasyJet raised its profits target for a second time this year amid strong bookings into the crucial summer period, pointing to higher fares at many airlines in the coming months. 

The airline said bookings remain strong into the coming months, prompting the company to upgrade its earnings target for a second time this year.

The airline, along with its bigger rival Ryanair, is benefiting from a combination of rebounding demand for summer travel and now expects to beat revised market expectations that foresee a pretax profit of £260m (€295m). That’s up from a previous goal of beating pretax profit expectations of just £126m. 

Fares stand to be higher than they were in 2019 because costs have increased, EasyJet chief executive officer Johan Lundgren told reporters. Airlines have cautioned that ticket prices are increasing amid higher demand as well as increased costs on everything from fuel to staffing to efforts to decarbonise the industry. 

Ryanair CEO Michael O'Leary said last month that airfares could rise between 10% and 15% this year, but are unlikely to increase more than 20%.

Revenue per seat for the fiscal third quarter will rise about 20%, EasyJet said following what the company called “robust’ sales during the Easter period when it operated about 1,600 flights a day at almost full capacity. 

Full pre-pandemic capacity

The carrier expects almost full pre-pandemic capacity during peak the summer period, with about 1,900 daily flights.

“Despite the increased cost of living, holiday budgets remain unchanged with travel being the only discretionary expense people are prepared to maintain or increase,” Mr Lundgren said.  

The shares rose as much as 4% in the session, which means they have gained 62% this year, the best performer on the Bloomberg World Airlines Index of 29 airlines in the period.

Beach and leisure destinations in Spain and Portugal were the most popular, Eayjet said.

Discount carriers including EasyJet and bigger rival Ryanair Holdings Plc are benefiting from a combination of rebounding demand for summer travel alongside travellers trading down during the cost-of-living squeeze. Air travel in Europe has soared and carriers are looking to repair balance sheets wreaked by the pandemic and ensuing travel restrictions.

EasyJet said in January that it expects to beat market expectations for a full-year pretax profit, and said that its loss in the first half would be significantly better than in the same period a year earlier. 

Bloomberg. Additional reporting Irish Examiner.

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