easyJet – Further To Climb

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easyJet plc (LON:EZJ)’s pre-tax losses for the full year were better than the market expected, at £1.1bn. That included a 52% reduction in revenue to £1.5bn, which was partially offset by a 33% fall in headline costs to £2.6bn.

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The group said it’s too early to say what effect the new Covid variant will have. However, it still expects next year’s summer travel capacity to be close to pre-pandemic levels. With the first quarter of the new financial year expected to see capacity at around 65% of 2019 levels.

Dividends are still off the table, and the policy will be reviewed during the new financial year.

The shares were broadly flat following the announcement.

The Impact Of Travel Restrictions On easyJet 's Earnings

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown:

“Airlines can’t seem to catch a break. News of new Covid variants, and the potential for further travel restrictions, makes it incredibly difficult to predict trading patterns from here. Unsurprisingly, easyJet flew a significantly reduced number of passengers this year than it did in 2020, and just when it thought it was breaking out of the clouds, there’s further uncertainty to contend with.

There are some competitive advantages where easyJet’s concerned. The biggest is that it’s a lower cost short-haul carrier, where demand should return at a faster rate than long haul. The group remains confident that capacity will be near pre-pandemic levels by next summer. A large pillar of that success comes down to easyJet’s favourable network too, with it holding more popular slots at prized airports.

There is no getting away from the fact there’s further to climb and the coming months will be patchy at best. But a newly refreshed liquidity position and competitive advantages means there are some reasons for optimism where easyJet’s concerned.”

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