Yahoo Finance EasyJet baggage and seat charges allow airline to cut its losses
EasyJet passengers have been forced to spend millions more on baggage charges and seat reservations, allowing the budget airline to cut its winter losses.
Combined with fares being more than a fifth higher, the Luton-based carrier said pre-tax losses had narrowed from £213m to £133m from October to December 2022.
EasyJet shifted its attention to growing “ancillary” revenue during the pandemic in a move that brought the airline closer to lower-cost rivals such as Ryanair and Wizz. The initiative was masterminded by former operating chief Peter Bellew, who previously worked alongside Michael O'Leary at Ryanair.
Mr Bellew stepped down last year in the wake of a spate of cancellations during the summer holidays.
EasyJet was close to doubling ancillary revenue – which would also include on-board food and drinks – during the final three months of the year when compared with pre-pandemic levels in 2019.
Customers now spend £20.12 each in add-ons – which is 36pc higher than the previous year.
Like Ryanair, the airline has enjoyed record bookings during January as the public take advantage of the easing of Covid restrictions.
Johan Lundgren, chief executive, hailed the rise in what he called a “step-changed revenue capability”.
He said: "We have seen strong and sustained demand for travel… carrying almost 50pc more customers compared with last year."
EasyJet shares rose more than 7pc in morning trading, a rare boost for the airline whose stock has struggled to gain momentum during the pandemic.
The positive sentiment was driven by bosses saying the airline would beat City expectations during 2023.
Mr Lundgren said: “We expect to see our winter loss reduce significantly over the first half compared to last year. This will set us firmly on the path to delivering a full year profit, where we anticipate beating the current market expectation enabling us to create value for customers, investors and the economies we serve."
Stephen Furlong, an analyst at stock broker Davy, had a word of warning for the airline, however.
He said: “Load factors [the number of people on each plane] are behind 2019 levels as the later booking pattern continues."
Gerald Khoo, from another broker, Liberum, said: “EasyJet has seen strong booking momentum for the rest of this year, including record revenue booking days in January.”
