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Visibility remains low at easyJet 

The budget airline narrowed losses as leisure and domestic travel bounced back
May 19, 2022
  • Bookings are 76 per cent sold for summer but visibility drops from September onward
  • Shortage of cabin crew hit capacity over the Easter period

Demand for holidays abroad has come roaring back. This was apparent over Easter, when easyJet (EZJ) and British Airways cancelled hundreds of flights because they could not find enough staff, and holidaymakers waited in long queues at the airports. easyJet said it flew six times as many passengers – 23.4mn in total – in the six months to 31 March, with more flights and a fuller capacity compared with last year.

Leisure and domestic routes have fully recovered, with summer capacity set to exceed 2019 levels at 113 per cent and 104 per cent, respectively, while demand for business and city traffic still lags behind pre-pandemic levels. This recovery has driven up revenue per available seat by 33 per cent to £49, with flight loads having improved to 77.3 per cent full, up from 63.7 per cent the year before.

Like its rival Ryanair (IE:RYA), easyJet did not offer guidance for the next year, saying that the short-term outlook is uncertain since “customers are booking closer to departure and visibility remains limited”. easyJet is already 76 per cent booked up for the third quarter beginning in June, but this falls to 36 per cent sold from September onward.

The ongoing staff shortage could threaten any further recovery for the discount airline. It plans to tackle the issue by offering new and existing cabin crew a £1,000 bonus at the end of the summer holiday season, in order to boost hiring and retention.

Liberum reiterated a target price of 800p for the airline’s shares, noting easyJet’s “clear optimism” on load factors and yields, meanwhile there are “positive pricing trends versus 2019 mitigating cost headwinds”, including rising fuel prices. Still, the travel industry has charted one of the most difficult journeys out of the pandemic, and with consumer spending now set for a fall, the future remains far from clear. Hold.

Last IC View: Sell, 491p, 30 November 2021.

EASYJET (EZJ)    
ORD PRICE:490pMARKET VALUE:£3.72bn
TOUCH:489-490p12-MONTH HIGH:866pLOW: 417p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE: 322pNET DEBT:35%
Half-year to 31 MarTurnover (£bn)Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p)
20210.24-645-102nil
20221.50-557-57.2nil
% change+524---
Ex-div:-   
Payment:-