UK airline easyJet says holiday demand holding up

The airline warned that the whole industry would be facing higher costs, from fuel prices, the stronger U.S. dollar and as a result of wage inflation.

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British airline easyJet said early bookings for next spring and summer were looking positive, and it was seeing 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 the growing pressure on household budgets from high inflation, energy prices and rising mortgage rates.

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

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

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

“EasyJet does well in tough times,” Chief Executive Johan Lundgren said in a statement on Tuesday.

“Consumers will protect their holidays but look for value.”

The airline warned however that the whole industry would be facing higher costs, from fuel prices, the stronger U.S. dollar and as a result of wage inflation.

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

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

Reporting results for the 12 months to the end of September, easyJet said that its headline pretax loss came in at 178 million pounds ($213 million), broadly in line with a consensus forecast for a 182 million pound loss.

The loss, reflecting 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) soared to 674 million pounds as holiday demand surged.

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