EasyJet flags profit hit from Israel-Hamas war

EasyJet has warned that first-quarter losses are not expected to improve due to recent disruption caused by the conflict in the Middle East.

The low-cost airline said its winter schedule had been affected by reduced demand for travel to Egypt, and a temporary pause on flights to Israel and Jordan following the outbreak of the Israel-Hamas war.

Air carriers have noted that the uptick in violence across the region since October has weakened the volume of near-term flight searches and bookings across the airline sector.

Fly away: EasyJet’s pre-tax profits more than trebled to £122million in the last financial year

Nonetheless, EasyJet said strong reservation levels for next summer and supply chain snags in Europe give the group a ‘positive outlook’ for the current financial year.

The Luton-based carrier saw pre-tax profits more than treble to £122million in the year ending September, thanks to a record second-half performance.

Revenues in both July and August soared above £1billion despite industrial action across Europe and chaos over the August Bank Holiday period when the UK’s air traffic control system suffered a technical glitch.

For the full year, turnover climbed by £2.4billion to around £8.2billion as the firm also benefited from the complete absence of Covid-related travel restrictions.

Meanwhile, EasyJet’s ancillary revenues soared by over half to £2.95billion, which were boosted by ‘rapid growth’ in its package holiday business and total passenger numbers rising by 19 per cent to 82.8 million.

It was able to grow passenger revenue per seat by 20 per cent year-on-year to £56.37, which the group attributed to its ‘optimised network at primary airports, as demand remained strong through the year’.

But group ancillary revenue soared by 51 per cent to just shy of £3billion, with extras-driven revenue per seat up 21 per cent to £23.47.

‘This is a result of easyJet’s ongoing efforts to increase conversion and revenue management, generating additional revenue for the airline,’ easyJet said.  

EasyJet will pay shareholders a 4.5p per share dividend, totalling £34million, having handed out nothing to them in the previous three years. 

Johan Lundgren, EasyJet’s chief executive, said: ‘Our record summer performance demonstrates the success of our strategy and that demand for easyJet remains strong as customers choose us for our network and value.’

He noted research showing that about three-quarters of Britons plan to spend more on their holidays than in the previous year as travel remains a ‘top priority for household discretionary spending’.

Lundgren added: ‘We are confident about the future and the opportunity ahead, focusing on capital discipline and driving our low-cost model to achieve our ambitious medium-term targets.’ 

EasyJet shares were 2.1 per cent higher at 413.6p on Tuesday morning, meaning they have grown by around 23 per cent since the year began.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘The good news for easyJet is that its problems are all outside of its control, which tells the market that its proposition is about as good as it can be – and is waiting to take-off once conditions allow.’

This post first appeared on Dailymail.co.uk