EasyJet Defies Summer Strikes with Strong Profit Rise
Budget airline EasyJet is projected to announce a significant increase in annual profits, demonstrating remarkable resilience in the face of costly French air traffic control strikes and broader industry pressures. The Luton-based carrier is expected to report that it successfully weathered the summer's significant disruptions to post robust financial results.
Navigating Headwinds: Strikes and Soaring Costs
In July, EasyJet issued a stark warning, stating that the widespread French air traffic control walkouts would create "significant" costs for all airlines. The industrial action in early July proved particularly damaging, forcing the cancellation of 660 flights and impacting tens of thousands of passengers. The direct financial hit from these cancellations amounted to £15 million. While threats of further strikes in October loomed, they were eventually called off, providing some late-year relief.
Despite absorbing this substantial financial blow and contending with higher fuel costs, the airline's performance remained strong. According to most analysts polled by AJ Bell, EasyJet is forecast to report headline pre-tax profits of £650 million for the year ending September. This marks a healthy increase from the £610 million recorded in the previous financial year.
Holidays Arm and Future Forecasts Provide Boost
A key driver behind this resilient performance has been the exceptional growth of EasyJet's package holidays division. The group had already guided that this arm would deliver over £235 million in profits for the full year, representing a surge of more than 24%. This success underscores a strategic shift that is paying substantial dividends.
Richard Hunter, head of markets at Interactive Investor, commented on the division's impressive performance, noting it "chimes with the group’s value-conscious appeal and the increasing body of evidence which tends to suggest that the family holiday remains almost sacrosanct and outside of normal budgetary restraints."
Looking ahead, the financial outlook appears even brighter. Analysts are already pencilling in another substantial profit increase for the 2025-26 period, with forecasts pointing towards £740 million.
Share Price Struggles Contrast with Operational Success
Despite the positive trading news, EasyJet's shares have failed to mirror the company's operational resilience. The stock has fallen by 18% so far this year, a decline that potentially puts the company in the firing line for demotion from the FTSE 100 in the upcoming December reshuffle.
Mr. Hunter highlighted the stark contrast, adding, "Indeed, the share price remains down by 62% from pre-pandemic levels, let alone the record highs of 10 years ago, since which time the shares have fallen by 71%, resulting in the group flitting in and out of the premier index."
Investors and industry watchers will be scrutinising the airline's comments on future booking patterns and consumer confidence, especially after rival Jet2 noted a trend of holidaymakers booking later. This evolving consumer behaviour presents the next challenge for EasyJet to overcome as it builds on its current financial success.
