“After recent warnings of lower summer fares by Ryanair and Jet2 sent shivers through the airline industry, EasyJet has helped the sector to gain altitude again with a contrasting update,” says Dan Coatsworth, investment analyst at AJ Bell.
“EasyJet sees fares as being broadly flat for the peak summer travel season. Investors are likely to get a fuller picture of the trend for demand and fares when Wizz Air and International Consolidated Airlines next update the market, with both scheduled to report at the beginning of August.
“There are signs across the industry that travellers are holding off booking until the last minute in the hope of getting a better deal. That is not helpful for operators in terms of earnings visibility.
“Travel disruption from the global IT outage and air traffic control strikes, and pressure for the industry to reduce its emissions, are additional concerns weighing on airlines.
“However, EasyJet seems remarkably upbeat despite turbulence in the market. It forecasts a record-breaking summer, suggesting that headlines around flight cancellations haven’t been disastrous for the business. Consumers might be booking flights closer to the departure date but EasyJet remains a popular choice for those jetting overseas. That’s testament to its brand strength.
“EasyJet’s latest trading statement also provides some endorsement of its decision to launch a package holidays arm in 2019. It creates broader opportunities to make money and is growing fast.
“Capitalising on its strong position in the airline market, it’s a no-brainer for EasyJet to bundle up flights and accommodation and holidaymakers are clearly putting trust in the business to lay on a decent experience from departure through to return.
“In just five years, EasyJet has created a business from scratch that has rapidly become a major name in the package holiday industry. Expectations for more than £180 million pre-tax profit from the division in 2024 is the kind of success most start-ups can only dream of.”
