EasyJet to shed light on impact of potential summer disruption
EasyJet will provide shareholders with an update on performance for its third quarter to June on Thursday July 20.
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Your support makes all the difference.Investors in easyJet will be keen for the budget airliner to reveal strong trading over the key summer season amid worries that industrial action and air traffic control limits could provide further turbulence.
EasyJet will provide shareholders with an update on performance for its third quarter to June on Thursday July 20.
The company is expected to report higher revenues after reporting strong booking levels for the summer earlier this year.
However, forward booking for the rest of the year will be a key area of interest for investors as customers’ household finances continue to come under pressure from the toll of inflation and higher mortgage costs.
In May, the FTSE 250 group reported that consumers were “safeguarding their holidays” despite the cost-of-living crisis as passenger numbers grew 41% over the six months to March.
It also reported a loss before tax of £415 million for the half-year, also this improved upon a £557 million loss a year earlier.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “While some of the worst of this should be behind the group, an added boost to sentiment could be found if easyJet’s successfully been able to carry on increasing its ticket prices to help offset lingering margin pressure.”
She stressed that “UK holiday demand has been formidable this year” so should boost the business but that there is “likely to be short-term pain” due to potential disruption.
The latest update comes amid a backdrop of caution across the sector as restrictions and pay disputes threaten to limit potential growth.
On Friday, almost 1,000 workers at Gatwick Airport, including baggage handlers and check-in staff, confirmed plans to strike in a dispute over pay.
Union Unite said easyJet would be one of the airlines affected.
Earlier in the week, the airline business had already said it was suffering disruption due to air traffic control (ATC) restrictions.
Strikes, staff shortages and air space closures related to the war in Ukraine mean ATC providers are limiting flight numbers across Europe, with flight numbers from major airports such as Gatwick being capped.
EasyJet said it has been forced to cancel 1,700 summer flights as a result.
Liberum analyst Gerald Khoo said: “Cancelling flights early allows easyJet to avoid punitive compensation payments and the overwhelming bulk of passengers can be re-booked onto alternative flights on routes with multiple daily frequencies.
“This could leave easyJet slightly behind the curve in yield terms, but the impact is likely to be modest and there remains plenty of time to catch up – we estimate that easyJet is slightly more than 50% booked for the current quarter.”