EasyJet shares climb 5% as forward bookings recover
EasyJet said booking strength for summer 2024 and supply constraints in Europe provided a positive outlook for its next year.
Shares in EasyJet climbed almost 5% after the airline posted 2023 earnings that were slightly ahead of analysts' expectations after a year of robust travel demand and forward bookings.
The carrier, however, said the Israel-Hamas war would weigh on the current quarter.
European airlines have been reporting strong results in recent months but war in the Middle East, high jet fuel prices, and the threat of recession have subdued outlooks, with some investors warning profits may have peaked.
EasyJet's earnings before interest and tax for its financial year to end-September came in at £476m (€433m) and compared with a loss of £27m last year.
Passenger revenue was reported at £5.2bn for the 2023 financial year, compared with £3.8bn in 2022.
The carrier said booking strength for summer 2024 and supply constraints in Europe provided a positive outlook for its next year.
"Capacity constraints are real," said Bernstein analyst Alex Irving. "Ryanair benefits a lot more though as it overlaps significantly with... Wizz and Vueling", which have been affected by aircraft groundings.
EasyJet said a temporary pause of flights to Israel and Jordan meant its first-quarter loss was unlikely to improve. It added, however, that near-term bookings and searches, which were hit when the conflict began, had already started recovering.
"Recent consumer research highlights that around three-quarters of Britons plan to spend more on their holidays versus last year, with travel continuing to be the top priority for household discretionary spending," said chief executive Johan Lundgren in a statement.
Sources investing in the sector have warned recently that airline earnings could peak after this quarter, but Mr Lundgren said he is confident that strong travel demand and consumer spending on trips will continue into next summer.
The group also said it would propose a dividend of 4.5 pence per share at its annual general meeting later in December.
It added that it had hedged 76% of its jet fuel requirements for the first half of the 2024 financial year, shielding it from price volatility.
EasyJet shares have had a bumpy ride in recent times. After recent gains, the shares are still trading only 8% higher from a year ago, as investors question whether the travel boom following the pandemic has already peaked. Ryanair shares have risen 33% from a year ago, while Aer Lingus owner IAG shares have risen 13%
- Reuters. Additional reporting Irish Examiner
