Despite the high expectations for its Q3 trading update, easyJet managed to beat most analysts’ expectations. Nonetheless, the easyJet share price was still weighed down by numerous factors. These include the recent air traffic controller (ATC) strikes, a recent rise in oil prices, and poor guidance from its peer, Ryanair, thereby clouding the company’s outlook going into the winter. Even so, the airline still posted a solid set of Q3 figures:
- Revenue grew by 34% to £2.36bn;
- Holidays pre-tax profits more than doubled to £49m;
- Headline pre-tax profits soared by a staggering 278% to £203m.
Overall, investors in easyJet shares will be delighted to see the firm’s passenger numbers growing towards their pre-pandemic levels. Meanwhile, its load factor also hit 90%. This was complemented by the growth in ancillary revenue, which includes add-ons such as baggage, seat selection, onboard dining, etc., thanks to an improved offering of goods and services. As such, it’s a surprise to see the easyJet share price doing so poorly.
Aside from that, ticket yields across all segments also grew by comfortable double digits. This allowed easyJet’s headline EBITDAR to grow by an exponential 261%, while margins grew by an impressive 15.8% — all of which are positives for easyJet shares.
Additionally, the business’ Holidays segment continues to climb at an unprecedented pace as it doubled its sales over the past year. Therefore, the board upgraded their guidance for Holidays to now generate over £100m in pre-tax profits for the year — up from the £80m projected last quarter. And with more growth in the pipeline from the launch of Holidays in Birmingham next summer, the easyJet share price may be set to fly higher.
Those invested in easyJet shares may also find some comfort in that travel demand doesn’t seem to be slowing down either. According to CEO Johan Lundgren, the travel operator’s winter bookings are up by more than 100%. Thus, he has plans to increase the budget airline’s capacity by 15% to meet the needs of strong winter demand. Considering the fact that winter is usually an unprofitable period for easyJet, these are encouraging signals.
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