EasyJet takes £40m hit from Middle East conflict but losses narrow

  • EasyJet paused flights to Israel and Jordan after the October 7 attacks 
  • Its headline pre-tax losses dropped by £7m to £126m in the first quarter

EasyJet expects first-half losses to narrow despite a forecast hit of around £40million related to the Israel-Hamas conflict.

The low-cost airline, which is headquartered at Luton Airport, temporarily paused flights to Israel and Jordan for safety reasons after the 7 October attacks in Israel, while bookings to Egypt were also affected.

These routes collectively comprise about 4 per cent of its winter flight schedule.

Softening demand: EasyJet, which is headquartered at Luton Airport, temporarily paused flights to Israel and Jordan for safety reasons after the October 7 attacks

But the company anticipates its seasonal winter loss for the first half of the 2024 financial year to decline due to ‘productivity benefits’ and expanded capacity in higher demand routes.

It revealed headline pre-tax losses dropped by £7million to £126million in the three months ending December, thanks partly to trade rebounding from late November.

Revenue increased by 22 per cent to £1.8billion following solid growth in ancillary sales and passenger numbers, with the latter rising by around 2.4 million to 19.8 million.

EasyJet also achieved a bumper performance in its holidays business, where sales nearly doubled to £181million and profits jumped from £13million to £30million.

Johan Lundgren said the result was a ‘testament to the strength of demand for our brand and network’.

He added that the group sees ‘positive booking momentum’ for next summer, with customers choosing to book flights to popular destinations like Spain and Portugal, as well as more distant countries like Greece and Turkey.

EasyJet expects customer levels at its holidays arm to expand by over 35 per cent this year, having grown by 48 per cent in the first quarter, as demand holds firm against consumer weakness. 

Richard Hunter, head of markets at Interactive Investor, said: ‘Headwinds will continue to present themselves, but for the moment, EasyJet seems well placed.

‘Aside from the conflict in the Middle East, there remains the possibility that the consumer will again batten down the hatches on discretionary spend.

‘That being said, there seems to be an increasing body of evidence to suggest that the family holiday remains almost sacrosanct and outside of normal budgetary restraints.’

EasyJet shares were 4.9 per cent higher at £5.33 on Wednesday morning, but they remain nearly two-thirds below their level at the start of 2020.

The company’s shares plummeted during the early stages of the Covid-19 pandemic as cross-border travel restrictions prevented people from travelling.

Demand has rebounded dramatically since those curbs were lifted, helping EasyJet to post a £455million profit for the year ending September 2023, compared to a £178million loss the previous year.

Last December, the FTSE 250 firm confirmed the purchase of 157 short-haul aircraft from Airbus in order to boost capacity and modernise its fleet.

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