EasyJet said on Wednesday that it expects its capacity to increase by 3 per cent in fiscal 2025 after reporting a smaller-than-expected annual operating profit due to disruptions from the ongoing conflict in the Middle East.
European airlines, such as Lufthansa and Air France-KLM, have struggled this year to varying degrees with limited plane deliveries, engine challenges, spiralling labour costs, flattening ticket prices and moderating demand.
EasyJet has dodged many of the issues that have plagued the sector thanks to its Airbus fleet equipped with CFM engines. It has also avoided the challenges surrounding US plane manufacturer Boeing and engine maker Pratt and Whitney, owned by RTX.
The airline reported an operating profit of £597 million for the year ended September 30th, compared to £625.6 million pounds expected by analysts, according to an LSEG-compiled poll.
However, its reported operating profit is 25 per cent higher than a year earlier. That is a “significant step towards our goal of sustainably generating over £1 billion annual profit before tax,” said outgoing chief executive Johan Lundgren in a statement.
EasyJet shares were up 3.4 per cent soon after the market opened.
While it has struggled with slightly higher fuel costs and some disruption from the Middle East, lower oil prices and a new network focus could help easyJet reframe its strategy for next year.
And expectations for the coming year are optimistic, with strong demand set to continue and more interest in easyJet’s lucrative package holiday business.
For the current fiscal year ending September 2025, the airline expects capacity of about 103 million seats and holiday customers to grow by about 25 per cent from last year.
“The airline will continue to grow, particularly on popular longer leisure routes like North Africa and the Canaries and we plan to take 25% more customers away on package holidays,” chief executive-designate Kenton Jarvis, who is replacing Johan Lundgren next year, said in a statement.
Alex Irving, an analyst at Bernstein, said this strategy could also “possibly be targeting a greater share of ‘sun and sand’ destinations in the Eastern Mediterranean, following the success of the holidays business that continues to go from strength to strength.”
Lower oil prices are set to help easyJet’s books next year as well, he added. - Reuters
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