EasyJet forecasts shrinking losses despite £40mn hit from Middle East conflict

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EasyJet said it expected winter losses to narrow this year, despite a £40mn hit from conflict in the Middle East.

The low-cost carrier on Wednesday reported a “short-term” impact from the outbreak of war in October after it suspended flights to Israel and Jordan, and the wider travel industry suffered a “temporary slowdown” in bookings.

But easyJet said demand for travel during the crucial summer season had been “building well”, and early indications implied that ticket prices would remain high this year.

Shares in the airline rose 5 per cent in early trading on Wednesday, amid its comments about a healthy summer trading environment.

Johan Lundgren, easyJet’s chief executive, said demand for the summer looked “positive”.

“We see positive booking momentum for summer 2024 with travel remaining a priority for consumers,” he said.

“Flight and holidays bookings took off strongly during the traditional busy turn-of-year sales period, as customers opted to secure their summer holidays,” Lundgren said.

The update comes after airlines enjoyed a bumper summer in 2023, with high ticket prices failing to deter passengers from travelling.

But airlines have still faced questions over whether demand for travel can withstand the weak economic backdrop.

EasyJet said early bookings this year had shown an increase “in both volume and pricing” compared with the same period last year.

It is the first major European airline to update on trading this year, and analysts at Bernstein said it had “confidently kicked off reporting season”.

“Pricing is healthy. In our view this reflects the supply-constrained environment in European short-haul and bodes well for another strong year for European point-to-point airlines,” the analysts said.

EasyJet reported a pre-tax loss of £126mn for the three months between October and December, down from £133mn a year earlier, as passenger numbers and ticket prices rose. 

Revenue in the quarter rose 22 per cent to £1.8bn, but fuel costs rose 31 per cent to £516mn.

EasyJet said it expected losses across the whole winter — the airline’s fiscal first half which runs from October to March — to also reduce year on year.

The company put the improved performance down to “disciplined” growth, which saw it build its flight schedules only around routes with the strongest demand.

The quieter winter season is often lossmaking for airlines, which have high fixed costs and often charge lower fares to try to fill their aircraft.