easyJet – profits boom but some potential challenges on the horizon
- Full year revenue total revenue up 42% to £8.2bn, reflecting higher prices, improved capacity, fuller planes and growth in easyJet holidays
- Increased capacity and holidays growth, together with higher fuel prices meant costs increased, but slower than revenue, resulting in headline profit before tax of £455m compared to a loss last year
- The group said trading in the new year has started well, with households expected to continue prioritising holidays
- Revenue per seat is being held back by Middle East conflict
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:
“easyJet has once again shown how its best-in-class operation has set it up for success. The group’s measured expansion at high-calibre airports has proved an especially shrewd move, as has the supercharged effort to push easyJet holidays. In a time when cost and convenience are the ultimate precursors to whether or not customers will splash on a trip, easyJet has been able to scoop up lots of existing demand in its net. Investors are being rewarded for their patience following a bumpy few years with the reinstating of the dividend. The starting point means there’s plenty of room for growth, but will allow easyJet to dip its toe before diving in, which is the right move in such an uncertain environment.
easyJet is adamant that households will continue to prioritise travel in the new financial year. There are early indication’s that’s true, but that could change at short notice if the UK folds into recession. The conflict in the Middle East also has the potential to dent performance and will need monitoring closely. 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.”
