Market Analysis

British airline easyJet (LON:EZJ) expressed confidence in robust travel demand for the upcoming summer season, anticipating further growth and prompting a surge in its shares following a forecast of a smaller-than-anticipated winter loss.

Despite escalating fares and financial pressures on consumers due to increased interest rates, easyJet CEO Johan Lundgren highlighted a positive outlook, citing ongoing consumer spending on travel in Europe.

Lundgren stated, "We are entering the summer period with assurance in our ability to achieve yet another exceptional performance," during a press briefing on Thursday.

Shares of easyJet rose by 4% at 0800 GMT, although currently trading at 538 pence, significantly below pre-pandemic levels of 1,300 pence, amid concerns regarding the sustainability of the continuous growth in travel spending.

The airline recently suspended flights to Israel until October, opting to reallocate capacity to destinations with anticipated strong demand, such as Malaga and Mallorca, with traditional holiday hotspots like Portugal and city breaks in Amsterdam remaining key areas of demand.

While tensions in the Middle East persist, Lundgren indicated that bookings to other regional destinations such as Egypt and Turkey remained unaffected.

EasyJet anticipates a pretax loss of £340 million to £360 million for the six months ending March, surpassing a consensus estimate of a £390 million loss, driven by better-than-expected revenue performance in the first half.

Analysts at Goodbody noted, "The first-half revenue performance exceeded expectations, while cost performance was in line with guidance, likely to be positively received by the equity market."

Looking ahead to the July-September period, easyJet plans to increase capacity by 7%, with revenue per seat expected to surpass last year's figures, fueled by strong growth in the group's holiday business.

Paraphrasing text from "Investing" all rights reserved by the original author.