EasyJet Sees "Strong, Sustained Recovery" Despite Big 1H Loss

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EasyJet Sees "Strong, Sustained Recovery" Despite Big 1H Loss
Credit: © Reuters.

By Geoffrey Smith 

Investing.com -- EasyJet (LON: EZJ ) said Tuesday it has experienced a "strong, sustained recovery" in bookings since the U.K. lifted its COVID-19 restrictions but still expects to have lost over half a billion pounds in the six months through March.

Europe's second biggest discount flyer said that bookings over the last six weeks have run ahead of the same period in 2019, the last comparable period before the outbreak of the pandemic and that it expects to fly at nearly 90% of its capacity over the current quarter and at close to its pre-pandemic capacity in the summer quarter.

The company was able to record a steady improvement in operations throughout the quarter as the wave of Omicron-variant COVID-19 swept through Europe before starting to ebb at the end of January. Load factor increased from 68% in January to 81% in both February and March.

The total number of passengers flown was over nine times the level of a year ago, at 11.545 million, while the company also succeeded in squeezing more revenue out of each booking by selling ancillary services such as vacations and car rentals. Ancillary revenue per seat sold rose to 19.56 pounds in the first half from 12.47 a year earlier.

Even so, the toll taken by COVID over the winter is high. The company said it expects a net loss for the first half of its fiscal year of between 535 million and 565 million pounds ($696 million-$736 million).

In contrast to rival Wizz Air (LON: WIZZ ), EasyJet has no direct exposure to routes into and out of Ukraine, Belarus, and Russia. But while its exposure to that risk is minimal, it can't escape the problem of higher fuel costs that are affecting all airlines right now. 

The airline said it has hedged nearly two-thirds of its fuel requirements for the next six months at a price of around $571 a metric ton ($78.11 a barrel). That compares to a spot price for jet fuel of $1,100 currently. Crude oil has traded well above $100/barrel since Russia's invasion of Ukraine.

However, it's hedging for the periods beyond September is much lower, at only 42% for the first half of fiscal 2023 and 15% for the second half. Since currently c.64% hedged for fuel in H2 of FY22 at c.US$571 per metric ton, c.42% hedged for H1 FY23 at c.US$654, and c.15% hedged for H2 FY23 at c.US$766.

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