Third quarter revenue rose to £1.8bn from £213m last year, reflecting strong increases across passenger and ancillary revenue. easyJet incurred £133m in costs from flight cancellations caused by capacity and staffing shortages in the aviation industry, meaning there was a reported pre-tax loss of £114m. Although this was a £204m improvement on last year.
The group flew 87% of pre-pandemic capacity and expects this to rise to 90% next quarter.
The shares were unmoved following the announcement.
Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown:
“Away from how many flights are in the air and how full they are, easyJet has proved it’s incredibly successful at squeezing more revenue from existing custom.
There was never going to be any escaping the labour and capacity constraints gripping the aviation industry, which meant easyJet downgraded capacity targets for the third quarter. Unfortunately, the logistics that come with cancellations and booking crowds of people on to new flights means the path to profitability has been extended. easyJet has particular exposure to one of the worst affected airports – Gatwick. While a lot of the operational issues are technically outside of easyJet’s control, those that had their summer getaways cancelled may not see it that way.
There are some strategic benefits where easyJet’s concerned, it was able to rebook a lot of its customers on flights leaving the same day, and crucially, the golden goal of flying 90% of pre-pandemic capacity is back on the cards for next quarter. This is an excellent step, but proof will be in the pudding, the group’s putting a lot of faith in its airport partners to have cleaned up the worst of the disruption.
Ancillary yields are up 55% on pre-pandemic levels as passengers seem more willing to spend on extras. This may well be caused by a new mentality sparked by the fact so many people haven’t had a foreign holiday in years, and how sticky this elevated demand will be, is not yet known. At the same time, ticket yields are climbing, proving just how strong demand is. Bookings have certainly snapped back into shape, and at a price point that’s good news for easyJet. The question now is how well this new framework can be maintained as the cost-of-living crisis swells. As households continue to feel the pinch, we may well see another resurgence in the stay-cation trend seen during the pandemic as families try to economise. The airlines best primed to encourage people to fly in these circumstances are those that offer reasonable rates to short and medium-haul destinations, with the added benefit of flying into more centralised airports a very real sweetener in easyJet’s toolkit.”
