EasyJet forecasts return to profit as travel industry weathers economic downturn

EasyJet has forecast a return to annual profit after three years of losses following “strong and sustained” passenger demand as the travel industry weathers the economic slowdown.

Shares in easyJet surged 10 per cent to 513.44p in early morning trading on Wednesday in London following the prediction as the low-cost airline said customers appeared to be “prioritising spending on holidays”.

It also reported three record-breaking weekends for sales revenue this month.

The airline plans to progressively expand its flight schedules into the summer, and to return to pre-pandemic flying levels by the peak summer months between July and September.

Johan Lundgren, easyJet’s chief executive, said this would put the airline “firmly on the path to delivering a full-year profit”, and predicted the carrier would beat current market expectations.

Lundgren added that the airline was selling enough seats to fill five aircraft every minute during the busiest periods of its recent winter sale.

The jump in easyJet’s shares took gains this year to more than 50 per cent as investors welcome growing signs that demand for travel is withstanding the economic uncertainty.

Other airlines also enjoyed rises in shares, with low-cost rival Wizz Air’s stock increasing 7 per cent, while British Airways owner International Airlines Group gained 3 per cent and Ryanair climbed 2 per cent.

Alex Irving, an aviation analyst at Bernstein, said easyJet had offered an “optimistic” start to results season and expected it to be “the first of several strong prints”.

Ryanair last week announced record bookings at the start of the year, and said there were “no signs” of a slowdown in consumer spending. The low-cost airline reports results next week.

“We expect the results season to reinforce recent messages from companies that record bookings are being taken in an environment of rising prices,” said analysts at Goodbody. “As such, we think market forecasts are likely to be raised for this year and next.”

The predictions for a strong summer came as easyJet reported a pre-tax loss of £133mn for the final three months of the year, down from £213mn lost the previous year.

EasyJet flew 20.2mn seats in the quarter, up from 15.5mn seats one year earlier. Revenue rose 83 per cent to £1.47bn.

The airline forecast that the loss in its fiscal first half, which runs between October and March, would be “significantly better” than the year before, when the airline reported a pre-tax loss of £557mn as the coronavirus pandemic continued to weigh on demand for travel.