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EasyJet share price gets a boost as it targets a return to profit

Passengers queuing to get on an easyjet aircraft

EasyJet's recent financial performance has been on an improving trend over recent quarters. Last year annual revenue increased by 296% to £5.77bn, in the year ending September 2022, with an expectation that this could push up to a record £8bn by fiscal year end.

The improvement was driven by a number of factors, including the relaxation of pandemic-related travel restrictions, strong growth in the easyJet holidays business, and a step change in the airline's ancillary offering, not to mention higher ticket prices.  Ancillary revenue, which includes things like checked bags and seat assignments, saw a big increase, rising to just shy of £2bn, and is forecast to increase to £2.47bn in the current fiscal year.

EasyJet holidays, the airline's travel business, also saw strong growth, with customer numbers increasing by 200% year-on-year. This was driven by the pent-up demand for travel following the pandemic, as well as easyJet's focus on offering competitive prices and a wide range of destinations.

Today’s H1 numbers have seen the airline report revenues in line with forecasts at £2.69bn, and a pre-tax loss of £411m, while costs were confirmed at £3.1bn. Airline ancillary revenue saw an improvement, rising 67% to £767m, with total revenue per seat rising 40% to £66.4m, although costs per seat were also higher at £77.6m, a rise of 19%.

The airline's load factor was 87.5% over the half year, up from 77.3% a year ago with an expectation that this would move into the 90% during H2. Its H2 guidance of 56m seats, a rise of 9%, was left unchanged with Q4 capacity expected to come in at around pre-pandemic levels of 94%.

The growing holidays operation continues to improve and expand, with customer numbers increasing to 0.6m during H1, a 0.4m increase on the same period last year. Revenues in this part of the business also improved, rising to £173m, with an expectation that the business will see an annual profit in excess of £80m. In the first half of this year the business generated a profit of £10m. EasyJet said it will also be expanding its holiday package market, with Switzerland being added this summer with a view to starting in early 2024.

The airline is confident that it can continue to grow its business in the coming years, as demand for air travel remains strong. Overall, easyJet's recent financial performance has been robust. The airline is well-positioned to deliver a full-year profit in 2023, but there are some risks that could impact its future performance.

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