EasyJet took a £40m hit from the Middle East conflict, but losses have narrowed

EasyJet expects first-half losses to narrow despite an estimated £40m hit from the Israel-Hamas conflict.

The low-cost airline, which is based at Luton Airport, temporarily suspended flights to Israel and Jordan due to security concerns following the attacks in Israel on October 7, with bookings to Egypt also affected.

Together, these routes make up about 4 percent of the winter flight schedule.

Easing demand: EasyJet, which is based at Luton Airport, temporarily suspended flights to Israel and Jordan for security reasons following the 7/7 attacks.

However, the company expects its seasonal winter losses to decline in the first half of the 2024 financial year due to «productivity benefits» and expanded capacity on routes with higher demand.

It showed total pre-tax losses fell by £7m to £126m in the three months to December, partly thanks to a recovery in business since the end of November.

Revenue rose 22 per cent to £1.8bn following solid growth in ancillary sales and passenger numbers, with passenger numbers up around 2.4m to 19.8m.

EasyJet also delivered a strong performance in its holidays business, where revenues almost doubled to £181m and profits jumped from £13m to £30m.

Johan Lundgren said the result was «proof of the strength of demand for our brand and network».

He added that the group is seeing «positive booking momentum» for next summer, with customers choosing to book flights to popular destinations such as Spain and Portugal, as well as further afield such as Greece and Turkey.

EasyJet expects customer numbers to rise more than 35 per cent over the festive period this year, up from 48 per cent in the first quarter, as demand resists consumer weakness.

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Richard Hunter, head of markets at Interactive Investor, said: “Headwinds will continue to present themselves, but at the moment EasyJet appears to be well positioned.

“Besides the conflict in the Middle East, the possibility remains that the consumer will once again spend the hatches on discretionary spending.

«That being said, there seems to be a growing body of evidence to suggest that family leave remains almost sacrosanct and outside of normal budget constraints.»

EasyJet shares were 4.9 per cent higher at £5.33 on Wednesday morning, but remain almost two-thirds below their early 2020 levels.

The company’s shares plunged during the early stages of the Covid-19 pandemic as restrictions on cross-border travel prevented people from traveling.

Demand has rebounded dramatically since the curbs were lifted, helping EasyJet post a £455m profit for the year to September 2023, compared with a £178m loss the previous year.

Last December, the FTSE 250 company confirmed the purchase of 157 short-haul aircraft from Airbus to increase capacity and modernize its fleet.

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