Holidays profit to ease £40m hit for easyJet from Middle East crisis
James ChappleA strong final quarter of the year for easyJet holidays, in which it more than doubled its profits year-on-year, looks set to ease an estimated £40 million blow to its airline parent company owing to the ongoing conflict in the Middle East.
EasyJet holidays delivered profit of £30 million in the three months to 31 December, up from £13 million a year earlier, while passenger numbers increased by 48%.
EasyJet itself on Wednesday (24 January) posted a slightly improved headline loss of £126 million for the typically quieter three months to the end of the year, its first quarter – down from a Q1 loss last year of £133 million.
The airline said the conflict in Gaza, which started in early October, had forced it to pause flights to Israel and neighbouring Jordan and triggered "a temporary slowdown in flight bookings for the wider industry", which lasted for almost two months before demand and bookings "recovered strongly from late-November".
In a trading update, easyJet said it nonetheless expected an improvement in its seasonal winter loss (six months to 30 March) despite the direct impact of circa £40 million from the crisis in the Middle East thanks to "disciplined capacity growth" to in-demand destinations, as well as productivity benefits.
EasyJet flew 19.84 million passengers during the three months to 31 December, up from 17.48 million a year earlier, delivering quarterly passenger revenue of £1.133 billion and ancillary revenue of £486 million despite a slightly lower load factor of 86%, down from 87% during the same period last year.
Quarterly revenue from its holidays division, meanwhile, almost doubled – from £93 million last year to £181 million.
"We delivered improved performance in the quarter, which is testament to the strength of demand for our brand and network," said easyJet chief executive Johan Lundgren. "The popularity of easyJet holidays also continues to grow, with 48% more customers in the period."
Albeit at an early stage, easyJet said bookings for summer 2024 were "building well", fuelled by a turn-of-year increase in both volume and pricing compared with last year, with revenue per seat for the second half of the year currently "well ahead year-on-year".
"This positive momentum is also evident in the holidays business, where we continue to expect customer growth to exceed 35% year-on-year," said easyJet.
Holidays has seen a boost in bookings for May, June and July, with Spain currently accounting for more than a quarter of all summer 2024 beach sales, supported by strong sales for other favourites including the Algarve, Crete, Rhodes, Turkey and Tunisia.
Family bookings comprise more than a third of all beach sales with easyJet holidays, with more than 70% of sales coming for four-star or five-star properties. Six in 10 bookings have been made on an all-inclusive basis.
Lundgren added: "We see positive booking momentum for summer 2024 with travel remaining a priority for consumers.
"Flight and holidays bookings took off strongly during the traditional busy turn-of-year sales period, as customers opted to secure their summer holidays to firm favourites like Spain and Portugal alongside destinations further afield like Greece and Turkey."
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