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.
The owner of 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.
EasyJet said it had invested in longer leisure and city routes, to Cape Verde, Marrakech, Turkey and Egypt. Its most popular package holiday destinations were Mallorca, Tenerife, Costa Blanca, Dalaman and Lanzarote. Top city breaks included Amsterdam, Paris, Prague, Krakow and Barcelona.
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. EasyJet Holidays grew to 3.1 million customers over the year, up 20%, with an expanded hotel range, doubling its UK market share to about 10%.
EasyJet’s chief executive, Kenton Jarvis, said its holidays had done “exceptionally well”, growing profits 32% year on year. “We’re clearly winning customers from competitors because we’re gaining a share overall,” he said.
The company 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 holidays 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.
Jarvis said: “The other thing we’re really pleased about was the operational performance of the airline, where we saw an improved on-time performance because of the investments we made in resilience, and also an increase in customer satisfaction to 80%, which is the highest level it’s been for over a decade.”
He said easyJet would only consider starting operations at London Heathrow if the cost was right, after the government announced its backing for the airport’s north-west runway scheme earlier on Tuesday.
The airline had previously expressed strong support for the expansion and talked up a move to the hub, but Jarvis said: “We have no idea regarding to what the cost of the project is really going to be. And therefore, what Heathrow do in terms of their fees. We’ll be very keen to have a commercial negotiation with Heathrow at a time when they’re ready for that.”
He expressed scepticism about whether the runway would actually be built, and how much the final bill would be. Heathrow has said it will cost £33bn. “We can bring more aircraft into the fleet if the right opportunity presents,” Jarvis said. “But, you know, it’s really premature. Let’s see, one, if it gets built, and two, what the costs are.
“I’m happy to talk to them about the type of operation we would hope to have there because we wouldn’t really want it over-engineered from a cost perspective.”
The FTSE 100 company’s shares fell by 4% on Tuesday, and are down 17% so far this year.
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.
