EasyJet (EZJ.L) has reported its 2023 earnings, surpassing analysts’ expectations, thanks to a year marked by strong travel demand and robust forward bookings.
However, the British airline has expressed concerns about the impact of geopolitical instability in the current quarter.
In recent months, European airlines have been delivering strong financial results.
Nevertheless, factors like the Middle East conflict, soaring jet fuel prices, and the looming threat of recession have dampened future prospects, prompting some investors to suggest that airline profits may have reached their peak.
For its financial year ending in September, EasyJet achieved earnings before interest and tax of £476 million ($600.9 million), surpassing the £473 million forecasted by analysts in an LSEG poll and marking a significant improvement from the £27 million loss it reported the previous year.
Passenger revenue for the 2023 financial year amounted to £5.2 billion, compared to £3.8 billion in 2022. This positive news led to a more than 2% rise in EasyJet’s shares during early trading.
The airline is optimistic about its outlook for the upcoming year due to strong bookings for the summer of 2024 and supply constraints in Europe.
However, it acknowledges the challenges of capacity constraints in the industry.
Despite the positive outlook, EasyJet anticipates that its first-quarter performance will be affected by a temporary suspension of flights to Israel and Jordan.
Nevertheless, the airline has observed signs of recovery in near-term bookings and searches, which were impacted when the conflict in the Middle East began.
EasyJet’s CEO, Johan Lundgren, noted that recent consumer research indicates a continued willingness among Britons to spend more on holidays compared to the previous year.
He emphasized that travel remains a top priority for discretionary household spending.
While some market experts have voiced concerns that airline earnings may plateau after this quarter, Lundgren expressed confidence that strong travel demand and consumer spending on trips will persist into the following summer.
The airline also announced its intention to propose a dividend of 4.5 pence per share at its upcoming annual general meeting in December.
Furthermore, it revealed that it has hedged 76% of its jet fuel requirements for the first half of the 2024 financial year to shield itself from fuel price volatility.