easyJet remains optimistic about the new FY, despite the Q1 challenges

easyJet’s FY23 results were broadly in line with the preliminary figures and the market’s expectations. The group is resuming a regular dividend distribution and expects to raise the pay-out next year. It continues to believe in a positive outlook for the FY, despite the Q1 net loss affected by the conflicts in the Middle East. No major changes are expected to our current estimates.

Targeting a 50%-100% increase in pre-tax per-seat profit in the mid-term

easyJet again posted traffic barely in line with the consensus although the preliminary financial results were consistent with the market’s expectations. The company’s long-term attractiveness has been reinforced by the resumption of regular dividend payments, new aircraft orders and ambitious mid-term guidance.

A more reassuring outlook especially in the Holidays business

The group marked a record-high and stronger-than-expected Q3 bottom line, despite barely consensus-aligned traffic figures. Supported by the buoyant momentum observed, easyJet’s outlook update should reinforce market sentiment, in particular on the easyJet Holidays unit. Our target price has been upgraded by 6.6% after integrating the new information.

Outlook reconfirmed: easyJet expects to run ahead of schedule

The group’s H1 actual results were in line with its preliminary figures. Its FY23 guidance and mid-term targets have both been reiterated, but the company is hoping to attain them earlier than initially projected. The robust momentum shown by easyJet Holidays is also worth underlining. No major changes are expected to our current estimates.

Spring is here and summer is not far off

The group’s summer booking momentum and its forecast upgrade in easyJet Holidays looks encouraging. easyJet should continue to benefit from reduced disruptions from the recent French ATC strikes. Its healthy balance sheet is a plus. Nevertheless, our current FY23 profit estimate appears too optimistic compared to the guidance, and we might need to revise downward our FY23 figures.

Spring is finally coming

The market reacted positively to easyJet’s Q1 trading update as the meaningful pricing tailwind and the continued restoration of load factors allowed for consensus-beating results and guidance. The buoyancy was further fuelled by the low-cost rivals’ promising stance on summer activities. We expect an upgrade in the consensus and to our valuation.

Hoping for a full recovery in the new FY

The group’s FY22 results confirmed its preliminary communication and the latest bookings continue to support a promising outlook. Nevertheless, a potential large-scale strike in France during the important Christmas holidays is weighing on the share price performance. We expect a slight upgrade to our valuations.

Keeping fingers crossed

easyJet’s last quarter should end up slightly better than the consensus, despite the fewer-than-guided passengers flown. The latest bookings continue to support a positive trend, while external uncertainties continue to overhang capacity delivery. Rising fuel prices and the USD are likely to be another unknown for FY23, despite considerable hedging in the H1. The stock market thus remains reticent about the name.

Significant airport disruptions drove Q3 into the red

easyJet’s Q3 trading update should be defined as mixed as we see severe negative impacts from the airport chaos, but the encouraging traffic figures, good hedging and further improved liquidity and net debt positions are worth noting. We might downgrade further our estimates to a small extent for the current FY and a further cut for the next FY is not impossible as Heathrow warns of a potential passenger cap for summer 2023.

Good-looking flight recovery plus strengthened hedging

easyJet’s H1 update looked good with in-line results (preliminary figures were communicated earlier), strong pricing power and improved hedging positions. No financial guidance was provided as this is a highly uncertain exercise in the current economic context. We however expect an increase in the consensus.

Remarkably solid pricing fosters margin rebuilding

Despite no further surprise in terms of the H2 capacity outlook, easyJet’s H1 trading update pleased the market with a better-than-expected pre-tax headline loss. It is worth highlighting the group’s more-than-robust pricing power, which is expected to largely offset the unhedged fuel costs and the recent activities disruptions/cancellations at UK airports.

Bearing the Omicron upset with strong pricing

The market reacted positively to the group’s Q1 results, as the slightly weaker-than-expected traffic figures were more than offset by the strong pricing. The fading away Omicron impacts and the progressive lifting of travel curbs in many European countries, especially in the UK, are hoped to drive an earlier normalisation of operations. The Q2 traffic projection is only slightly lower than the pre-Omicron schedule and the year-end projection remains unchanged to approach its pre-crisis level.

Dark clouds before dawn?

easyJet’s FY21 results correspond to the market’s anticipations as the preliminary figures were communicated previously. Despite the worsening COVID-19 situation in Europe, the group seems upbeat on its capacity forecast for the next FY. Too early to judge whether it is too optimistic as all depends upon the development of the new Omicron variant.

Dawn coming?

easyJet’s Q4 21 results were seemingly stronger than analysts’ expectations and the group upgraded its capacity schedule for Q1 22. As the COVID-19 border restrictions in the UK are lifting, a good trading performance has been seen in the past two weeks. We expect the consensus to be raised.

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