EasyJet losses tumble 80% following relaxation of travel curbs

EasyJet annual losses have narrowed by 80 per cent after the airline posted record underlying earnings of £674million in the fourth quarter. 

The group reported pre-tax losses of £169million in the 12 months ending September, against £858million the previous year, as it continued to battle higher costs and a weaker-than-expected rebound in passenger numbers. 

Nearly 70 million people flew with the air carrier over the period, compared to 20.4 million last year when onerous Covid-19 restrictions severely depressed demand for overseas travel.

Total turnover climbed almost fourfold to £5.8billion as a result, with the group’s performance buoyed by considerable growth in its package holidays business and per passenger revenue rising by a third at constant currency levels.

However, EasyJet could not post a profit as the ramp-up of capacity led to surging costs, particularly for fuel, the price of which has been supercharged by loosening pandemic-related curbs and the war in Ukraine.

The emergence of the Covid Omicron variant, which lead to the reimposition of travel restrictions, and disruption at airports over the Easter period also weighed on sales.

Widespread staff shortages left airlines struggling to cope with the resurgence in passenger volumes earlier this year, causing mass delays and flight cancellations for millions of holidaymakers.

EasyJet said this disruption subsided after it reduced capacity and major travel hubs like London Gatwick and Amsterdam Schiphol put daily passenger limits in place, though it cost the group £78million against 2019 levels.

Nonetheless, the FTSE 250 company said it began the current financial year with ‘one of the strongest balance sheets in European aviation’ and noted that booking numbers for the Christmas and Easter holidays are quite high.

Optimism: ‘EasyJet does well in tough times. Legacy carriers will struggle in this high-cost environment,’ remarked chief executive Johan Lundgren (pictured)

For the first half of the period, the firm forecasts a 25 per cent increase in capacity volumes followed by a 9 per cent rise in the subsequent six months, with fourth-quarter capacity at pre-pandemic volumes.

Johan Lundgren, EasyJet’s chief executive, remarked: ‘EasyJet does well in tough times. Legacy carriers will struggle in this high-cost environment.

‘Consumers will protect their holidays but look for value, and across its primary airport network, easyJet will be the beneficiary as customers vote with their wallets.’

Matt Britzman, an equity analyst at Hargreaves Lansdown, said: ‘Demand looks to be resilient, despite obvious cost of living pressures.  

‘Jet setters are splashing what cash they have on travel, chasing down some winter sun or heading up the mountains to don their best ski outfits. 

‘How long this willingness to keep spending lasts is difficult to judge, but with easyJet feeling positive about Spring next year, it looks like holidays could be one of the last areas to see spending reign in.’ 

EasyJet shares were 4.5 per cent, or 17.6p, down at 375.4p on late Tuesday morning, meaning their value has fallen by 29 per cent since the start of this year.