18th Apr 2023 12:29
(Alliance News) - easyJet PLC on Tuesday forecast its yearly profit outturn to top market expectations, as the budget carrier shows signs of real promise after "patiently waiting" for an emergence from a Covid-19 hit.
For the full-year ending September 30, the company expects a swing to profit, which would be its first since the pre-pandemic financial 2019. easyJet anticipates pretax profit to top market consensus of GBP260 million. easyJet posted a headline pretax loss of GBP178 million in financial 2022, narrowed from GBP1.14 billion. Its reported pretax loss had narrowed to GBP208 million from GBP1.04 billion.
For the half-year ended March 31, it expects revenue for the six months to amount to GBP2.69 billion, up 80% year-on-year from GBP1.50 billion.
Its headline pretax loss is forecast to have narrowed to a range of GBP405 million and GBP425 million, from GBP545 million 12 months earlier. The better bottom-line outcome is despite the carrier juggling rampant inflationary pressure, in the form of rising staff and fuel costs.
Some self-help measures have helped easyJet's bottom-line, RBC Brewin Dolphin analyst John Moore commented.
"Taking more of a 'Ryanair approach' to routes, baggage allowances, and staff shifts has helped to protect yields and margins, and the airline is well hedged in terms of fuel costs," the analyst explained.
"The usual seasonality means easyJet expects to deliver a headline loss for the half, but there are real signs the airline is beginning to turn a corner. While the outlook is uncertain for consumers, easyJet expects to deliver profits ahead of market expectations for the full year, underlining the significant turnaround it has gone through in the past couple of years."
easyJet noted "strong booking momentum" heading into the summer, with consumers prioritising travel spending and opting for the "best value and destination mix".
"Easter demand has been strong with around 1,600 flights operating on average per day with robust operational performance achieved. Capacity over Easter, in the UK, was back around pre-pandemic levels, with strong demand and positive yield growth compared to Easter 2019. Disruption from French [air-traffic control] strikes continued to be seen through April, though easyJet's investment into resilience will help mitigate its impact," it said.
In the second quarter, passenger numbers rose 35% from the previous year, and load factor improved to 88% from 78%.
AJ Bell analyst Russ Mould commented: "A lot of things are going right for easyJet following a long period of patiently waiting for the airline industry to recover from the pandemic. It is flying more passengers, ticket prices are higher, growth for its package holidays arm is better than expected, and it has lifted full-year profit guidance.
"Airlines' shares have stalled in recent months, but easyJet should be on track to build up around 40p of earnings per share over the next 12 months or so, which would make the company's shares appear on the cheap side relative to the rest of the market."
easyJet shares traded 1.0% higher at 515.98 pence each in London on Tuesday afternoon.
By Eric Cunha, Alliance News news editor
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