ASYJET shares rose 10% today after the budget airline forecast a return to profit as customers brushed aside cost pressures and booked overseas holidays at record levels.
The company posted losses of more than £1 billion in 2020 and 2021 as Covid restrictions ravaged airlines.
Today it said it should return to profit this year and by summer the number of planes in the air should reach pre-pandemic levels.
It is the latest sign that UK consumers may be feeling more confident in the face of gloomy economic forecasts.
The share rose 48p to 516p. In particular, the City was pleased that EasyJet Holidays, recently launched, is making a profit of £31 million compared to the previous year’s £1 million.
Chief Executive Johan Lundgren said Britain was prioritizing holiday spending, with “strong and continuing” demand for travel.
This month saw three record-breaking weekends for sales. EasyJet fills five airlines every minute during peak hours and thinks the summer will be hot.
EasyJet lost £133 million in the last three months.
Those losses are much better than the £213 million made last time – the travel trade typically loses money in the winter months.
Passenger numbers have increased by 47% over a year ago. The fall in fuel prices has helped in keeping the cost of flights low.
CEO Johan Lundgren said: “Customers are looking for value, which easyJet can provide.” More than half of its flights are being sold.
The company is “firmly on track” to make a profit for the full year which should be well ahead of City’s forecast of £126 million.
Dimitris Hyotis at global consultancy Simon-Kucher & Partners said: “Despite economic concerns and the cost of living crisis, holidays are catching up in terms of demand, as people are yet to leave their summer break for 2023. are not prepared for; This can only be encouraging news for easyJet and the wider region.
Michael O’Leary, the boss of arch-rival Ryanair, has said WizzAir and EasyJet must merge to survive. Wizz Air actually launched an audacious, if speculative bid, which was rejected by EasyJet.
Lundgren told TODAY that he’s “never been a bigger believer” than he “will see larger M&A transactions” in the sector.
Sophie Lund-Yates at Hargreaves Lansdowne said: “EasyJet has shown how to do recovery after a pandemic. Its superior offer means its planes are at the right airports, with the right routes, to capture demand as holidaymakers return to the skies. Offering a better service also feeds into EasyJet’s surprising ability to sell extra to existing customers. Ancillary revenue, such as extra legroom, food and accessories, has been growing and now makes up 28% of total revenue. These add-ons are highly attractive and suggest holiday makers are going all-out after years of constrained travel.
Last week Ryanair also said it had seen record bookings of late.
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