EasyJet reported slightly better-than-expected earnings for 2023 on Tuesday, thanks to a year of strong travel demand and forward bookings. However, the British airline warned that geopolitical instability could impact the current quarter. Despite recent strong results from European airlines, concerns about war in the Middle East, high jet fuel prices, and the potential for recession have dampened outlooks. Some investors have even suggested that profits may have reached their peak.
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EasyJet's pre-tax earnings for the financial year ending in September were £476 million ($600.9 million), surpassing the £473 million predicted by analysts in an LSEG poll. This is a significant improvement from the £27 million loss reported last year. Passenger revenue for the 2023 financial year was £5.2 billion, up from £3.8 billion in 2022. The company's shares saw a more than 2% increase in early trading.
The airline is optimistic about the coming year, citing strong bookings for summer 2024 and supply constraints in Europe. However, EasyJet noted that the temporary suspension of flights to Israel and Jordan means its first-quarter loss is unlikely to improve. Despite this, the company reported that near-term bookings and searches, which initially dropped when the conflict began, are already rebounding.
CEO Johan Lundgren stated in a press release that recent consumer research indicates that approximately three-quarters of Britons plan to increase their holiday spending compared to last year, with travel remaining a top priority for discretionary household spending. Despite warnings from sector investors that airline earnings could peak after this quarter, Lundgren expressed confidence in continued strong travel demand and consumer spending on trips into next summer. EasyJet also announced plans to propose a dividend of 4.5 pence per share at its annual general meeting in December. The company has hedged 76% of its jet fuel requirements for the first half of the 2024 financial year, providing some protection against price volatility.