Despite announcing a return to profits, due to a record performance in the second half, easyJet’s share has struggled to approach the levels at which it was trading in April and May this year.
The shares have also lagged Ryanair, whose shares are up 40% so far this year and have returned to pre-Covid levels, although they are still up more than 20% so far this year. anus.
Since falling to a 10-month low in October, easyJet shares have made a modest rebound and are up slightly in early trading as the low-cost airline confirmed an annual pre-tax profit of £455 million, to which easyJet holidays have contributed £122 million.
The dividend has been reinstated and a payment of 4.5 pence per share has been confirmed in early 2024, representing 10% of profit after tax, with the intention of increasing this to 20% in 2024 and 2025.
Total profits for 2023 increased by 42%to £8.17bn, while costs rose 30% to £7.7bn, driven by rising fuel costs as well as costs arising from the growth of easyJet holidays.
The load factor for 2023 rose to 89%, up from 86% in 2022, and the airline flew 82.8 million passengers, up 19%. The airline’s profit per seat amounted to £79.84, a 21% increase on the previous year and slightly below forecasts. This figure is well below the levels achieved by Ryanair, whose load factors stand at 93%.
For 2024, easyJet remains optimistic, although the impact of events in the Middle East has prompted a modest reassessment of the outlook for the first half due to the suspension of flights to Israel, Jordan and Egypt.
easyJet’s holiday business is forecast to record 35% growth in 2024, taking its share of the UK market to 7%.
As a result, easyJet said it does not expect to improve its losses from the first quarter of last year, although a rebound in the summer months of next year is expected to offset the slow start to the year.
The airline is adding value in all its key areas, with strong gains in ancillary revenue and average revenue per seat, and will aim to continue improving in 2024.
Fuel costs for 2024 are 76% covered for the first half and 51% for the second.
Regarding new aircraft, the airline confirmed the order for 157 new aircraft from Airbus worth $20 billion, between 2029 and 2034, with an option for 100 more.
All in all, today’s update is largely in line with expectations, although one can’t help but get the feeling that the shares are underperforming their peers, but at least the reinstatement of the dividend is a sign that it has stopped behind their post-Covid tribulations.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
