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UK's EasyJet Says Peak Holiday Demand Strong, Tougher At Other Times

By Dave Simpson

British airline easyJet on Tuesday 29 November forecast healthy travel demand for next spring and summer based on early bookings, but warned of the need for attractive fares to stimulate demand outside peak periods.

Details

The outlook, one of the first from a European airline for next summer, comes as investors look for signs of whether bookings can hold up as household budgets take a hit from soaring energy bills and rising mortgage rates.

Analysts have warned on the airline sector, where demand for flights tend to track economic growth. Britain, easyJet's biggest market, is already in recession, while the overall economic outlook for Europe has darkened significantly.

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For the six months from April 2023, the period when easyJet tends to make the bulk of its profit, early bookings showed higher ticket yields for Easter from last year, with holidaymakers planning trips to Turkey, Egypt and the Greek islands.

Chief Executive Johan Lundgren said there was strong demand for Christmas, with ticket yields up 18%, and also for the coming ski season.

"Outside of peak periods, it's fair to say that there's a need to stimulate the market to get the demand back," Lundgren said, adding this was not unusual during the winter.

Shares of the airline fell 4% to 378 pence in morning deals on Tuesday 29 November and continue to trade well below its pre-pandemic level of around 13 pounds. They have lost nearly 33% of their value so far this year.

Davy analysts said there were no incremental positive surprises since its last update in October, while Citi analysts said easyJet's outlook reflected "softer pricing comments versus peers".

Ryanair, Europe's biggest airline and a low-cost competitor for easyJet, had earlier this month said November and December bookings were strong and it expected robust traffic and average fare growth over the next 18 months at least.

EasyJet said the airline industry is facing higher fuel costs, a stronger U.S. dollar and wage inflation, while CEO Lundgren stressed the need to keep fares attractive even as it tries to recover as much of the possible rises.

Reporting results for the 12 months to the end of September, easyJet said its headline pretax loss was £178 million, broadly in line with the Refinitiv consensus forecast for a 182 million pound loss.

Pandemic Impact And Cancellation Costs

The loss due to the impact of the pandemic in late 2021 and early 2022 and disruption as well as cancellation costs last spring masked a profitable summer quarter when core earnings (EBITDAR) soared to £674 million as holiday demand surged.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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