EasyJet cuts losses and insists Britons will not ditch holidays amid cost crisis

Budget airline easyJet has insisted cash-strapped Britons will not ditch their overseas holidays in the face of soaring costs as it posted sharply narrowed annual losses after a record summer performance.

The group reported underlying pre-tax losses of £178 million for the 12 months to September 30 against losses of £1.1 billion the previous year.

EasyJet said it notched up its best earnings for a single quarter over the summer, at £674 million on an underlying basis, as the ending of pandemic travel restrictions put overseas holidays firmly back on the agenda.

Chief executive Johan Lundgren said consumers will prioritise holidays as they come under pressure from soaring inflation, adding that bookings for next spring and summer are already looking positive.

But the low-cost carrier cautioned over “market-wide” cost increases and said its first-half fuel expense was set to be more than 50% higher year-on-year due to soaring inflation.

The group’s costs – excluding fuel – jumped 106% over the past year to £4.6 billion.

EasyJet is hiking ticket prices in response, with prices looking “strong” for next Easter, though it hopes its budget offering will help it weather the cost-of-living crisis.

Mr Lundgren said: “EasyJet does well in tough times. Legacy carriers will struggle in this high-cost environment.

“Consumers will protect their holidays but look for value, and across its primary airport network, easyJet will be the beneficiary as customers vote with their wallets.”

EasyJet remained in the red over the past year as it was hit by an extra £78 million in disruption and compensation costs caused by the travel chaos over the summer as flights were delayed and cancelled due to staff shortages across its operations and at airports.

This masked a record-breaking final quarter, with its flight programme back to around pre-Covid levels, which helped full-year passenger numbers jump 242% to 69.7 million on the pandemic-hit previous year.

The group said it had already started recruiting for next summer to help avoid the disruption seen in 2022.

It recently launched a cabin crew recruitment campaign focused on the over-45s to boost its workforce.

Mr Lundgren said it had received a “phenomenal” response with applications up 75% on a daily basis, adding that the group would look to extend the campaign outside the UK.

It is seeing applications outstrip roles advertised, with 19,000 applications for 2,000 cabin crew jobs being offered.

EasyJet added that it would consider deals to expand as smaller rivals across Europe fall foul of the cost crunch, saying it will not “rule anything out”.

“There will be a number of airlines that will struggle… and don’t have the resource to go through uncertainty,” Mr Lundgren said.

Shares in easyJet fell 3% in morning trading on Tuesday.

Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Bottom-line profits remain a little out of reach for easyJet, who’ve seen a wave of headwinds over the year from Omicron early on, to airport disruptions and flight cancellations more recently.

“Rather than head for the emergency exit, easyJet’s made the best of a bad year and full-year results mask a positive fourth quarter.”

He added that early signs of resilient demand for next year were encouraging.

“How long this willingness to keep spending lasts is difficult to judge, but with easyJet feeling positive about spring next year, it looks like holidays could be one of the last areas to see spending rein in,” he said.