The UK-based budget carrier said the H1 loss – which marked a deterioration of £158 million compared to the previous year – was caused by a £25 million uptick in fuel costs resulting from the Middle East conflict as well as previously reported winter losses at its new bases in Milan Linate and Rome Fiumicino.
In an earnings call on Thursday (21 May), easyJet CEO Kenton Jarvis reported weaker forward bookings, with load factors for both Q3 and Q4 currently below prior year levels, while shorter booking windows are limiting visibility into the year’s second half.
“From a demand perspective, as you would expect, we have seen softness in forward bookings. However, March saw a strong late booking environment for in-month departures, a trend that has continued through April and into May,” he said.
Like many European carriers, easyJet has relied on its fuel hedging strategy to help manage rising fuel costs. Jarvis said the carrier currently has 72 per cent of its fuel requirements hedged at $726 per metric tonne, but that “volatility remains around the unhedged proportion”.
“In response to this uncertainty, in March we also reviewed our summer network and redeployed around 400,000 seats away from countries adjacent to the conflict into domestic and city routes across the wider easyJet network,” he explained. “In addition, we trimmed some thick flows in the shoulder season of April and May, as a result of the elevated fuel prices. This resulted in a net reduction in seats of 0.3 per cent.”
Jarvis stressed that “we’re not making any further changes” to the summer schedule, adding “we see no fuel supply impact and continue to operate our schedule as planned.”
Responding to analyst questions, however, Jarvis said the carrier will likely “moderate” its capacity next winter.
On customer loyalty, Jarvis reported “growing” membership for its easyJet Plus subscription product, which is targeted to business travellers and includes benefits such as free seat selection, the inclusion of cabin baggage, priority boarding and discounts on inflight purchases.
Off the back of this, Jarvis announced plans to launch a loyalty programme in 2027 that will “complement” the Plus programme and “further enhance our differentiated customer offering”.
While scant on the details, Jarvis said the carrier will present more information about the new loyalty scheme “early next year.”
H1 metrics
Easyjet reported a 10 per cent year-on-year increase in H1 passenger revenues to £2.4 billion, while airline ancillary revenues also increased 10 per cent year-on-year to £1.1 billion.
Revenue per available seat kilometre (ASK) increased 1 per cent year-on-year, while load factor improved by 2 percentage points to 90 per cent.
EasyJet holidays generated £61 million in pre-tax profit, with a 22 per cent growth in customers.
The carrier’s medium-term objective of achieving more than £1 billion in profit before tax remains unchanged. However, easyJet chief financial officer Jan De Raeymaeke noted there is "significant uncertainty" about the airline’s full-year performance “due to the current macro-economic environment with fuel prices remaining volatile as well as the lower visibility of future bookings”.
Tags: Kenton Jarvis easyJet
