The London-Listed Budget Airline EasyJet Expects Strong Summer Business Following a Reduced Loss in the First Half, Although the Year-End Outlook Has Weighed on Shares.
EasyJet reports that demand for summer continues to be positive and that it has gained 1 million more customers than the previous year. For the second half of the year, the company expects an 8% increase in seat capacity compared to the previous year.
"We are now absolutely focusing on another record summer, which is expected to deliver strong profit growth for the fiscal year 2024, and we are on track to achieve our medium-term goals," said the outgoing CEO Johan Lundgren.
EasyJet announced on Thursday that Lundgren will step down early next year. The current Chief Financial Officer Kenton Jarvis has been appointed his successor.
At 10:44 GMT, EasyJet shares were trading 3.6% lower at 508.6 pence, as some analysts believed that the company's outlook for the fourth quarter was weaker than previously stated.
Regarding the outlook, it remains positive, but the language concerning returns has clearly softened, as returns are now expected to be slightly higher in the fourth quarter," the analysts at Goodbody said in a statement.
The company reaffirmed that revenue per seat for the third fiscal quarter is expected to be slightly higher than the previous year. For the fourth quarter, a slight increase in revenue per seat is now expected compared to the previous forecast of a "significantly higher" revenue per seat.
This change represents a "somewhat softened" tone according to Bernstein analysts.
The company's outlook may have also disappointed some who were still hoping for higher returns this summer, JPMorgan analysts said in a statement.
"The forecasts of only 'slightly' better yields per seat in the third quarter are consistent with recent comments on weaker spring bookings by Jet2 and Ryanair," said Interactive Investor analyst Lee Wild in a statement.
EasyJet added that annual profit growth is being driven by the length of summer travel and EasyJet Holidays, which recorded a customer growth of 42% in the first half of the year.
Flights in the third quarter are currently about 77% booked, while flights in the fourth quarter are about 39% booked. EasyJet Holidays is 77% booked for the summer, the company said.
EasyJet also reported that ancillary revenues increased by 30% during the reporting period and that ancillary revenue per seat also increased as the company's capacity rose by 12%.
The occupancy rate of the airplanes – i.e., how many of the company's seats are filled – decreased slightly from 87.5% in the previous year to 86.7%.
The adjusted pre-tax loss for the period – an important metric that excludes extraordinary and one-off items – amounted to 350 million pounds ($444 million) compared to a loss of 411 million pounds in the previous year.
Sales increased by 22% to 3.27 billion pounds, with passenger revenue up by 17% and revenue per seat up by 5%.
EasyJet added that it expects the capacity for the fiscal year to reach about 100 million seats.
