EasyJet issues upbeat projection as tour operation profits hit £122m

EasyJet holidays’ annual pre-tax profits grew 221% to £122 million in the year to September 30.

The figure contributed to easyJet delivering a profit of £455 million for the 12 months on the back of a record summer, against a loss of £178 million in the previous 12 months.

Overall incremental revenue from easyJet holidays of £776 million was more than double the previous year’s contribution of £368 million, with 1.9 million customers delivering £122 million profit against £38 million in the previous year.

New research commissioned by the airline this month revealed that more than two thirds (67%) of UK consumers have said they more likely to travel abroad in 2024 than this year. 

Protecting holiday spend remains a priority for most with 77% saying they will prioritise spending money on a holiday over anything else in their yearly budget – up from 70% last year.

To prioritise holidays, people will be cutting back on other discretionary spend, with more than half reducing their spend on eating out (54%), 40% cutting back on new clothes and shoes and 38% opting not to pay for a new car or home upgrades to be able to get away. 

The poll of 2,000 consumers found that around 70% of people saying they are more likely to book with a low-cost carrier (up from 66% in 2022) and holiday in closer to home destinations in Europe (72%), in order to protect their holidays, compared with just 10% planning a trip to North America and 9% to Asia. 

Almost all surveyed (91%) agreed that going away on holiday is crucial to their wellbeing – up from 83% in 2022. 

Chief executive Johan Lundgren said: “Year after year we see the value and importance of holidays increasing for consumers. These findings couldn’t be clearer that travel not only remains a priority for people, but that they are ever more determined to protect and even boost their holiday budgets, not least because of the many benefits and opportunities travel offers us. 

“We are already seeing this in our bookings for holidays next year and with our unrivalled European network and fantastic value for money, easyJet is well placed to take even more people on the holidays they value in 2024.” 

The budget carrier said the summer performance was delivered despite high fuel costs and the challenges arising from the “external operational environment”, thanks to initiatives implemented over the past year and a half. 

“Supported by strong consumer demand and easyJet’s leading brand position, the company’s success is driven by the low-risk expansion at primary airports, significant increases in ancillary revenue, market beating growth for easyJet holidays and a constant focus on cost,” the airline added.

This came as easyJet flew 82.8 million passengers, up 19% on the previous 12 months – this being the first year with no travel restrictions since pre-pandemic 2019.

“Disruption due to external industrial action has been a feature throughout the year, starting in the first half of the financial year with French ATC strikes resulting in flight cancellations and an impact on on-time performance. In March alone only five days were unaffected by strike action,” the airline disclosed.

However, easyJet holidays continued to perform strongly, with a “significant growth” in customer numbers and a low fixed-cost operating model. 

Looking forward, the pan-European carrier said the 2024 financial year had begun positively with strong year-on-year profit growth in October and revenue per seat on early bookings for Q2-Q4 “pleasingly ahead” of last year. 

“There’s also strong growth in easyJet holidays’ bookings for all periods on sale, continuing the upward trend. Consequently, easyJet aims for continued progress towards our medium-term profitability ambitions.”

But the airline cautioned: “Early winter results for FY24 will see an impact from the conflict in the Middle East, which started on 7th October. 

“In our planned winter schedule, flights to Israel, Jordan – both temporarily paused – and Egypt represented 4% of capacity. 

“Additionally there was a broader impact on near term flight searches and bookings across the industry, though this seems to be coming back with a recent improvement in trading. 

“Accordingly, despite positive underlying strength, easyJet does not currently expect its Q1 loss to improve year-on-year. 

“The present booking strength for summer 2024, coupled with supply constraints in Europe, provide a positive outlook for the year as a whole.”

Lundgren added: ”Our record summer performance demonstrates the success of our strategy and that demand for easyJet remains strong as customers choose us for our network and value.

“We see a positive outlook for this year with airline and holidays bookings both ahead year-on-year and recent consumer research highlights that around three quarters of Britons plan to spend more on their holidays versus last year with travel continuing to be the top priority for household discretionary spending.

“We are confident about the future and the opportunity ahead, focusing on capital discipline and driving our low cost model to achieve our ambitious medium term targets.”

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