Airline Stocks See Recovery After EasyJet’s Positive Summer Bookings Assessment
In the midst of concerns over air travel demand and increasing discounting from its competitors, easyJet has reported a positive outlook for its summer bookings. The airline stated that its prices have remained flat on average compared to last year and there is no indication of a decrease in bookings as the peak summer season approaches. As a result, easyJet’s shares rose by 8%, with other aviation rivals also seeing gains after experiencing widespread losses on Monday due to Ryanair’s performance and outlook.
In addition to its positive summer bookings assessment, easyJet also raised its annual profit forecast for its holidays division after reporting a 16% increase in third quarter group pre-tax profits to £236m. Chief Executive Johan Lundgren shared with reporters, “We remain on track to deliver another record-breaking summer, taking us a step closer to our medium-term targets.” He also added, “On the current view of the market, you will have some parts of the network and some flights that are cheaper than last year, but some would be slightly more expensive. But on average, the fare environment is very similar to what we saw last year.”
Despite the positive tone from easyJet, there are still concerns within the industry about the impact of high ticket and holiday prices on customers, as the cost of living remains a strain for many in Europe. However, easyJet reported that its summer flight schedule is currently 69% booked and declined to give a specific profit forecast, only stating that the outlook is positive.
Following easyJet’s announcement, Ryanair’s stock rose by 2%, while Wizz Air and BA owner IAG also saw similar gains. John Moore, senior investment manager at RBC Brewin Dolphin, commented, “Ryanair’s results earlier in the week cast a shadow over airlines, but easyJet’s performance should provide a level of assurance that conditions aren’t necessarily gloomy across the entire sector. Profits and bookings remain on a positive trajectory, while its easyJet Holidays offering is making an even more meaningful contribution to the company’s bottom line.”
Despite ongoing concerns about the longevity of the post-COVID travel boom, Moore believes that easyJet is in a better position than many of its peers and should be able to weather this turbulent period. He stated, “Concerns over the longevity of the post-COVID travel boom will likely hang over airlines for some time yet – easyJet is down 15% in the year to date. But today’s results demonstrate that easyJet is in a better position than many of its peers and should be able to pull through this turbulent spell.”
