EasyJet said demand for travel remained “robust” despite the economic downturn, but cautioned that uncertainty was clouding the outlook as airlines head into winter.
The low-cost airline’s chief executive Johan Lundgren said on Thursday that booking patterns were looking resilient for the rest of the year, particularly for the UK half-term and Christmas holidays.
“We continue to see robust customer demand,” he added.
“Clearly there is uncertainty out there, but we need to see what that will lead to . . . as we speak now, we have good booking momentum.”
EasyJet’s trading update comes as investors and analysts struggle to predict the toll a weakening global economy will have on the rebound in demand for air travel.
No major European airline has publicly reported a decline in bookings despite rising inflation stoking a cost of living crisis.
Airline shares have tumbled regardless, as investors price in a difficult winter and rising costs. EasyJet shares have fallen 17 per cent over the past month, taking their drop to more than 50 per cent this year.
“The stock prices of European airlines suggest the market does not believe that demand will be sustained sufficiently to mitigate inflationary pressures,” HSBC analysts said in a recent note.
Lundgren said holidays and travel appeared to be “top of the list” for people able to prioritise their spending.
“Customers continue to protect their holidays where they can.”
He said changes to the business during the pandemic would help insulate easyJet from any turbulence, including moving to a more seasonal model that allows the carrier to flex its staffing up and down during the traditionally quieter winter period.
“We did things in the pandemic that will play in our favour going forward,” he said. “That will have an impact hopefully on the share price but at the same time you have to realise there is quite a lot of uncertainty across the sector.”
EasyJet said it expected to report its third straight annual loss, as the costs of travel disruption and drag from the strong dollar offset resurgent demand for flying over the summer.
The airline forecast a pre-tax loss of between £170mn and £190mn for its financial year ending in September, after losing more than £1bn in both 2020 and 2021.
Widespread travel problems in the early summer led to disruption costs totalling £75mn more than in 2019, while the airline also reported a £64mn foreign exchange hit from the surging dollar as many of its costs are denominated in the US currency.
Lundgren said he would “clearly” like to see the pound recover against the dollar, but pointed to a strategy in which the airline was 78 per cent hedged at $1.29 to the pound for the next six months.
Still, easyJet reported a strong performance during the busy July to September quarter.
It forecast earnings of £665mn to £685mn for the three-month period, which Lundgren said represented “one of the best quarters in easyJet’s history”.
The airline flew 26.3mn seats in the summer quarter, 88 per cent of 2019’s schedule before the pandemic hit.
The airline said it expected this to fall to 20mn seats in the final three months of this year, 80 per cent of 2019 levels, which in part reflected its newer and more flexible operating model.