- First quarter pre-tax loss of £126m reported, narrower than last year’s £133m
- Load factor dropped from 87% to 86%
- Middle East conflict has had a £40m impact, reflecting paused flights to Israel and Jordan as well as weakness in Egypt
- Summer bookings are “strong”
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:
“Geopolitical conflict can spook many industries, especially airlines. Broader softness was seen at the outbreak of the Middle East conflict in October, and easyJet is counting the lost pennies from paused flights to the tune of £40m. Shutting down routes is a very expensive undertaking and it’s unclear when things will normalise.
Looking further into the year, summer bookings look robust, in a sign that travel remains a priority for consumers. There is some uncertainty about how long these trends can hold though. Lower earners have run out of road when it comes to trimming costs amid cost of living pressures, according to the HL Savings & Resilience Barometer. However, higher earners have seen their financial resilience improve over the last couple of years, and the net effect of these changing circumstances is an unknown for the likes of tourism stocks.
Investors will be more concerned about the group’s ability to maintain the newly reinstated dividend. At this stage it seems unlikely easyJet will scrap its plans to increase the payout to 20% of post-tax profits this year, but that will depend on the resilience of forward bookings.”
