UK airline easyJet says holiday demand remains up

The airline warned that the entire industry would face higher costs due to fuel prices, a stronger US dollar and wage inflation.

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British Airways easyJet said early bookings for next spring and summer were looking positive and it had seen strong demand for peak holiday weeks this winter, with customers accepting higher ticket prices despite the tougher economy.

The outlook could give investors confidence that holiday bookings can hold up despite mounting pressure on household budgets from high inflation, energy prices and rising mortgage rates.

As the economic outlook in Europe darkened, analysts warned that bookings could fall. Historically, demand for flights has tended to follow economic growth and easyJet’s biggest market, the UK, is already in recession.

But easyJet said that for the six months to April 2023, when the airline tends to make most of its profit, early bookings looked positive, with Easter ticket yields higher than in 2022, although it warned that visibility remained low.

For the current winter period, the airline said Christmas ticket yields were up around 18% amid strong travel demand.

“EasyJet is doing well in difficult times,” Chief Executive Johan Lundgren said in a statement on Tuesday.

“Consumers will protect their vacations, but they’re looking for value.”

But the airline warned that the industry as a whole would face higher costs due to fuel prices, a stronger US dollar and wage inflation.

Lundgren said the current circumstances would benefit low-cost airlines such as easyJet, while legacy carriers such as Air France and British Airways, which tend to have higher cost bases, would struggle.

Ryanair, Europe’s largest airline and a low-cost competitor, said earlier this month that bookings in November and December were strong and it expected robust growth in traffic and average fares over the next 18 months at least .

Reporting results for the 12 months to the end of September, easyJet said its total pre-tax loss amounted to 178 million pounds ($213 million), broadly in line with a consensus forecast for a loss of 182 million pounds.

The loss, which reflects the impact of the pandemic in late 2021 and early 2022 and disruption and cancellation costs last spring, masked a very profitable summer quarter when earnings (EBITDAR) rose to £674m, as holiday demand increased.

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