29th Nov 2022 14:40
(Alliance News) - easyJet PLC reported a "record bounce back" in the year ended September 30 on Tuesday, with a sharp rise in annual revenue and a significantly narrowed loss.
"Rather than head for the emergency exit, easyJet's made the best of a bad year and full year results mask a positive fourth quarter, where on some profit measures easyJet posted record numbers," Matt Britzman at Hargreaves Lansdown.
The low-cost airline said revenue in the year multiplied to GBP5.77 billion from GBP1.46 billion, while its pretax loss narrowed sharply to GBP208 million from GBP1.04 billion.
easyJet credited the relaxation of Covid-19 restrictions and an increase in ancillary product sales for the revenue rise.
Group ancillary revenue trebled to GBP1.95 billion from GBP458 million, while passenger numbers totalled 69.7 million during the period with an 86% load factor, more than trebling from 20.4 million with a 73% load factor a year earlier.
For CMC Markets' Michael Hewson, however, comparing today's loss to a year ago is like comparing apples with oranges, given the huge disruption seen to aviation that was caused by the aftermath of the pandemic a year ago.
Further, this was easyJet's third successive annual loss, despite travel restrictions now being far in the rear view mirror.
"EasyJet is doing everything it can to accelerate its recovery from Covid, but there just isn't enough momentum to swing the company back to positive earnings," said Russ Mould at AJ Bell.
"It is trying to put across a positive message: losses are narrowing, it has high levels of cash to provide a buffer if the recovery takes longer than expected, and the holidays business is profitable and growing... However, if you exclude peak periods like half-term, Christmas and New Year, the airline is having to work extra hard to fill planes," Mould said.
"That suggests ticket prices will have to come down during non-peak periods to entice people to book, which is great for the customer but bad for the airline when you consider that cost pressures are still intense on the aviation industry. If that happens, it's fair to assume that peak airfares will go even higher to compensate," AJ Bell's Mould continued.
easyJet admitted on Tuesday that it expects fuel prices in the first half of its new financial year to increase by 50% year-on-year. In addition, it cautioned on market-wide inflationary pressure in the year ahead.
However, Richard Hunter at interactive investor argued that this was only the beginning of easyJet's possible headwinds.
"Nor does the list of headwinds end there, with a question mark over the consumer's desire to take short-haul breaks amid a cost of living crisis, a volatile oil price, wage inflation and the strength of the US dollar all impacting on the immediate outlook," Hunter said.
Nonetheless, easyJet said early bookings for the new financial year look positive, with ticket yields for the Christmas period are currently up around 18% compared to last year, and the Easter period looking similarly strong.
"easyJet does well in tough times. Legacy carriers will struggle in this high-cost environment. Consumers will protect their holidays but look for value and across its primary airport network, easyJet will be the beneficiary as customers vote with their wallets," said Chief Executive Johan Lundgren.
For Hargreaves Lansdown's Matt Britzman, though there are "a host of factors outside easyJet's control", its strong balance sheet position and targeted moves into new growth areas, like easyJet holidays, "put the group in a decent position."
Richard Hunter, interactive investor, agreed: "A potentially new direction of travel is at last emerging and although airlines remain at the higher end of the risk scale as they have always historically done, the market consensus of the shares as a buy reflects growing optimism for the company's prospects over the longer term."
easyJet shares were down 4.3% at 376.10 pence on Tuesday afternoon in London. In the year-to-date, the stock was down just over 38%. This compares to a decline of 20% for the wider FTSE 250 index.
By Heather Rydings; [email protected]
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