On Tuesday, EasyJet reported a record H2 pre-tax profit as soaring demand for holidays over the summer helped the company swing to a pre-tax profit for the full year.
EasyJet shares were up 3.36% and are trading at 418p at the time of writing on Tuesday.
In the fiscal year 2023, easyJet reported a headline profit before tax of £455 million, showing a substantial improvement of £633 million compared to the previous year.
EasyJet holidays experienced remarkable growth, expanding 221%, with the pre-tax profit being £122 million.
According to Sophie Lund-Yates from Hargreaves Lansdown, “easyJet has once again shown how its best-in-class operation has set it up for success. The group’s measured expansion at high-calibre airports has proved an especially shrewd move, as has the supercharged effort to push easyJet holidays. In a time when cost and convenience are the ultimate precursors to whether or not customers will splash on a trip, easyJet has been able to scoop up lots of existing demand in its net.”
She added that “investors are being rewarded for their patience following a bumpy few years with the reinstating of the dividend. The starting point means there’s plenty of room for growth, but it will allow EasyJet to dip its toe before diving in, which is the right move in such an uncertain
Looking into the future, EasyJet reports that the revenue per seat for Q2 to Q4 is expected to outperform YoY.
EasyJet holiday sales are anticipated to experience growth of over 35% in FY24, with the average selling price (ASP) increasing.
Investors will also be happy to learn the company is reinstating a dividend of 4.5p to be paid in early 2024.
EasyJet also reported a plan to increase the payout to 20% of the profit after tax for FY24.
Sophie Lund-Yates further stated, “easyJet is adamant that households will continue to prioritise travel in the new financial year. There are early indications that’s true, but that could change at short notice if the UK folds into recession.”
Lund-Yates also highlighted the conflict in the Middle East was hurting winter bookings.
“The conflict in the Middle East also has the potential to dent performance and will need monitoring closely. The good news for easyJet is that its problems are all outside of its control, which tells the market that its proposition is about as good as it can be and is waiting to take off once conditions allow,” Lund-Yates said.