Profits climb at easyJet as holiday bookings lift off

"Our strong performance in the quarter has been driven by more customers choosing easyJet for our unrivalled network of destinations and value for money,” said easyJet chief executive Johan Lundgren.

Airline passenger numbers rose by 8% to 25.3m and easyJet’s in-house holidays division reported a big surge in profits.

Launched in 2019, easyJet holidays offers holiday packages to more than 100 destinations across Europe and saw pre-tax profits soar 49% during the quarter from £49m to £73m.

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The holidays business is now expected to report pre-tax profits of £180m at easyJet’s full-year results in November, 48% ahead of the previous year.

Richard Hunter, head of markets at online investment service Interactive Investor, said the performance of easyJet holidays had “all but come from a recent standing start” to now represent 13% of group revenues.

“The launch of the holidays business seems to have come at the right time, with cost-conscious consumers searching for value packages, and the group has high hopes for its longer-term contribution to overall profits,” he said.

Mr Lundgren, who is leaving easyJet next year after seven years, said the latest results were achieved despite Easter falling earlier this year – in March rather than April.

This demonstrates the “continued importance of travel” and means the company remains “on track to deliver another record-breaking summer, taking us a step closer to our medium term targets."

EasyJet’s bullish update contrasts sharply with gloomy results on Monday from rival operator Ryanair, which reported a fall in first quarter profits and warned that fares for its key summer months would be “materially lower” than last year. The news prompted a sell-off in airline sector shares.

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Commenting on easyJet’s performance, Julie Palmer, partner at restructuring firm Begbies Traynor, said: “The aviation industry can breathe can a sigh of relief, with this morning’s update from EasyJet providing a strong counter to Ryanair’s disappointing results and proving it is not all doom and gloom for the sector.”

But she added there were signs of the “travel boom waning” and another holiday season being blighted by strikes and air-traffic control mishaps.

“With a very mixed picture emerging from the wider sector, easyJet will have to work very hard to allay concerns about depressed ticket prices over the coming months,” Ms Palmer added.

Costs from disruption were “much improved” on last year because of a 33% fall in events, easyJet said. But it expects the “challenging European air traffic control environment” to contribute to slightly higher costs per seat, excluding fuel, in the next quarter.

EasyJet said revenues in the third quarter grew 11% to £2.63 billion, fuelled mostly by increasing passenger numbers and the continued growth of easyJet holidays – but also by selling extras to customers.

“These include things like extra baggage, legroom, and food and are a great way to grab a larger share of sunseekers’ budgets,” explained Aarin Chiekrie, an equity analyst at Hargreaves Lansdown.

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Looking ahead to the rest of the year, easyJet said bookings for the fourth quarter were already almost 70% sold, despite a 7% increase in the number of tickets on sale.

“This means easyJet has currently sold 1.5 million more seats for peak summer compared to the same point in time last year,” the airline said.

The company reported a strong net cash position, with £456m in the bank, compared to £146m at the end of March.

Based in Luton, easyJet is Britain’s biggest budget airline and employs around 750 of its 16,000 staff in Scotland, including pilots, crew and engineers.