Even though household budgets are tight, the British airline easyJet (LON:EZJ) said that demand for the next few months was holding up, but it was hard to predict what would happen after that because of uncertainty.
For Britain’s October school break and Christmas week, ticket sales were higher than they were before the pandemic. The airline said that winter bookings and prices were strong, which is a measure of how many seats were filled.
Last week, tickets for next summer went on sale, and EasyJet said they showed “continued demand.” This helped ease some worries that the rising cost of living could slow the aviation industry’s recovery from COVID-19.
But CEO Johan Lundgren said it was too early to say how next year would go, and he said that the policies of the British government were not helping.
“It’s clear there’s uncertainty out there,” he told reporters on Thursday, referring to the fact that the government’s plans for tax cuts that can’t be paid for have caused the market to be unstable.
“I don’t usually comment directly on this government’s fiscal policies, but of course, we’d like to see certainty and stability, and we’d like to get back to a point where the pound is getting stronger.”
Even though the cost of living is going up, Lundgren said that easyJet was in a good position because its fares were lower than those of competitors like British Airways and Air France, and people wanted to travel.
“Even though families are having trouble, we still know that vacations and travel are at the top of the list when people can choose how to spend their extra money,” he said.
At around 282 pence, which is an 11-year low, easyJet shares were down 1% around mid-morning. As inflation rises, investors are worried about how much people will want to travel in the future. This has caused European airline stocks to fall.
In the last six months, EasyJet has lost 49% of its value, which is worse than competitor Ryanair, which has lost 28%.
Even though EasyJet hasn’t yet reached its pre-pandemic capacity, the number of people who flew on Ryanair in September was higher than ever before. EasyJet flew 88% of its 2019 seats in the summer quarter, and it wants to get to 83% in this quarter.
EasyJet and the airports it uses were hurt by a lack of workers a lot more than RyanAir was. This happened from April through June. It had to cancel thousands of flights before its schedule became more stable in July.
Lundgren said that the quarter from July to September was one of the most profitable in easyJet’s history, but that problems and costs earlier in the year would cause it to lose money for the third year in a row.
For the 12 months ending at the end of September, EasyJet said it would lose between 188 and 211 million dollars before taxes. Results should be posted on Nov. 29.
(1 dollar = 0.9020 pounds).
