LONDON, Nov 28 (Reuters) – EasyJet (EZJ.L) on Tuesday reported 2023 earnings slightly ahead of analysts’ expectations after a year of robust travel demand and forward bookings, but the British carrier said geopolitical instability would weigh on the current quarter.
European airlines have been reporting strong results in recent months but war in the Middle East, high jet fuel prices and the threat of recession have subdued outlooks, with some investors warning profits may have peaked.
EasyJet’s earnings before interest and tax for its financial year to end-September came in at 476 million pounds ($600.9 million), above the 473 million pounds expected by analysts in an LSEG poll and a loss of 27 million pounds last year.
Passenger revenue was reported at 5.2 billion pounds for the 2023 financial year, compared to 3.8 billion pounds in 2022. Shares rose more than 2% in early trading.
The carrier said booking strength for summer 2024 and supply constraints in Europe provided a positive outlook for its next year.
“Capacity constraints are real,” Bernstein analyst Alex Irving said. “Ryanair benefits a lot more though as it overlaps significantly with… Wizz and Vueling,” which have been affected by aircraft groundings.
EasyJet said a temporary pause of flights to Israel and Jordan meant its first-quarter loss was unlikely to improve. It added however that near-term bookings and searches, which were hit when the conflict began, had already started recovering.
“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,” CEO Johan Lundgren said in a statement.
Sources investing in the sector have warned recently that airline earnings could peak after this quarter, but Lundgren said on a media call he is confident that strong travel demand and consumer spending on trips will continue into next summer.
The group also said it would propose a dividend of 4.5 pence per share at its annual general meeting later in December.
It added that it had hedged 76% of its jet fuel requirements for the first half of the 2024 financial year, shielding it from price volatility.
($1 = 0.7921 pounds)
Reporting by Joanna Plucinska; Editing by Sarah Young, Kirsten Donovan and Jan Harvey
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