EasyJet has reported a rise in annual profits as strong demand for its package holidays to destinations including Tenerife and Lanzarote offset more difficult trading for its airline.
Europe’s second-biggest budget airline upgraded its outlook for its holidays division, where it raised prices by an average of 5% to £698 for each break.
Its most popular package holiday destinations were Mallorca, Tenerife, Costa Blanca, Dalaman and Lanzarote. Top city breaks included Amsterdam, Paris, Prague, Krakow and Barcelona.
Analysts said the results indicated that consumers saw family holidays as “almost sacrosanct” despite a challenging macroeconomic environment.
EasyJet said it had invested in longer leisure and city routes, to Cape Verde, Marrakech, Turkey and Egypt. It opened new bases at Milan Linate, Rome Fiumicino and London Southend, while two underperforming bases, Toulouse and Venice, were closed.
The company’s headline pre-tax profit rose by 9%, or £55m, to £665m in the year to 30 September. It said the wider geopolitical, economic and competitive environment remained difficult for its airline, particularly over the winter.
Airline revenue climbed by 6% to £8.7bn, as easyJet increased capacity by 4% to 104m seats. Fuel costs fell by 7% for each available seat kilometre, a key metric, because of some fleet modernisation and favourable hedged fuel prices.
EasyJet Holidays fared better, and had 3.1 million customers over the year, up 20%, with an expanded hotel range and growth in UK market share. It has sold 80% of its holiday packages for the first half of the new financial year, with average selling prices up in high single digits.
The holiday division made £1.4bn in revenues, up 27%, and £250m profit before tax, achieving this target early. As a result, easyJet set a new target of £450m profit for easyJet holidays by 2030, as it aims for total group profits of £1bn in the medium term.
However, the FTSE 100 company’s shares fell by 2% in early trading, and are down nearly 16% so far this year.
Kenton Jarvis, the easyJet chief executive, said: “Since setting our medium-term targets in 2023 we have made significant progress, delivering a 46% improvement in profit before tax. EasyJet holidays is today launching an even more ambitious goal, having achieved its target early.”
Richard Hunter, the head of markets at the investment platform Interactive Investor, said: “It is the easyJet holidays arm which has again stolen the show. This is a burgeoning business which seems to have come at the right time with cost-conscious consumers searching for value packages.”
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He said there was mounting evidence to suggest that “the family holiday remains almost sacrosanct and outside of normal budgetary restraints”.
The company invested £20m into new bases at airports in Milan and Rome with eight aircraft, and plans to spend a further £30m this winter at these locations.
Two more new bases will launch next year, Newcastle in March and Marrakech – easyJet’s first in Africa – in the summer, with three aircraft each.
The company has taken delivery of nine new A320 family aircraft, and repurchased a further eight leased jets.
EasyJet is taking part in the Black Friday retail bonanza, offering discounts of up to 10% on flights until next Monday.
