easyjet shares takeoff on strong summer bookings

easyjet shares were higher on Wednesday after the airline announced strong momentum going into the summer months and strength in the first quarter.

easyJet’s first quarter results showed improving underlying performance, despite conflict in the Middle East temporarily impacting operations.

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The airline expects to reduce seasonal losses in the first half of 2024 versus last year, absorbing a £40 million impact from the conflict. easyJet holidays saw a 48% jump in customers.

easyjet shares were 5% higher at the time of writing on Wednesday.

The key passengers growth metric increased by 14% as loss before tax for the first quarter reduced to £126m from £133m in the last year. With profits almost exclusively weighted to summer months, airlines are expected to recorded losses over the winter.

Bookings indicate a positive summer ahead, with early trends showing increased volume and pricing year-on-year. easyJet expects second half revenue per seat to remain well ahead of 2023 levels, with higher loads and yields in Q3 and Q4. Cost control initiatives aim to deliver flat unit costs, excluding fuel.

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The holidays business anticipates over 35% more customers this financial year. While the Middle East conflict caused short-term disruption, easyJet enters peak summer with strengthening demand and momentum.

“Geopolitical conflict can spook many industries, especially airlines. Broader softness was seen at the outbreak of the Middle East conflict in October, and easyJet is counting the lost pennies from paused flights to the tune of £40m. Shutting down routes is a very expensive undertaking and it’s unclear when things will normalise,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

“Looking further into the year, summer bookings look robust, in a sign that travel remains a priority for consumers. There is some uncertainty about how long these trends can hold though.

“Investors will be more concerned about the group’s ability to maintain the newly reinstated dividend. At this stage it seems unlikely easyJet will scrap its plans to increase the payout to 20% of post-tax profits this year, but that will depend on the resilience of forward bookings.”

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