Yahoo Finance FTSE 250: EasyJet warns on £190m loss after airport chaos
EasyJet (EZJ.L) expects to record a £190m loss for the year after taking a £200m ($222m) hit from the travel chaos in UK airports over the summer months.
The budget airline said the airport chaos had increased its annual disruption costs by around £75m before the pandemic struck. It's also set to book a £64m foreign exchange hit.
EasyJet said fourth-quarter underlying earnings over its peak season were expected to be between £525m and £545m thanks to a record rebound in demand over the summer.
The earnings before interest and tax, marks a “record bounce back” for the carrier, CEO Johan Lundgren said in a statement. It means the company will breakeven this year.
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Lundgren flagged an "uncertain" wider economic backdrop but said the airline was "Europe's largest operator at primary airports with one of the strongest balance sheets in the aviation industry".
The London-listed airline expects to kick off the new year with capacity up a third year-on-year to some 20 million seats, as it anticipates continuing to attract holidaymakers with low prices despite an economic downturn sweeping Europe.
“EasyJet achieved a record bounceback this summer with fourth quarter operating profit expected to be between £525m and £545m, and passenger numbers almost doubling versus last summer to 24 million,” Lundgren said.
He added: “Our summer 23 season went on sale last week and we were filling the equivalent of more than four A320 aircraft a minute in the opening hours, demonstrating the continued demand.”
EasyJet also said that it was already seeing demand for next summer, giving it confidence despite the rising cost of living.
"EasyJet is being cautious on expanding capacity, but these companies as a group have avoided some of the operational issues that have plagued the major European hubs through the busy summer travel season. Third Bridge experts see a solid holiday travel season this year, but the outlook for the summer 2023 is murky at this point,” Peter McNally, global sector lead for Industrials, Metals & Energy at Third Bridge, said.
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“The combination of a higher cost of living and ongoing labour shortages are creating a more cautious environment around capacity and longer-term demand for the European low cost carrier segment. EasyJet's sales figures due today will likely show strong operations and a minimal impact from the legacy airlines in Europe that cannot compete on cost in the domestic market,” he added.
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