No-moat easyJet’s EZJ financial year ending September 2024, showcased impressive results and strong progress toward the company’s medium-term targets. The airline reported a headline profit before tax of £610 million, representing a substantial 34% increase year on year, outpacing many of its European competitors. Despite management highlighting softening conditions, we maintain our fair value estimate.
Key factors driving the robust financial results include: (1) easyJet managed to surpass its record summer performance from the previous year; (2) the airline successfully reduced its winter losses despite challenging market conditions; (3) its focus on cost management has yielded positive results with cost per seat, excluding fuel, increasing by only 1% year on year, which is particularly noteworthy given the challenging macro environment and inflationary pressures; (4) easyJet’s asset-light holiday division made a significant contribution, generating £190 million in profit, a remarkable 56% increase from the previous year. easyJet’s operational performance was equally strong.
While the airline increased its total capacity by 8% compared with the previous year, passenger numbers grew at the same rate while load factors and sector length remained flat for the full year. This capacity growth has given easyJet a head start on its medium-term target for a 5% compound annual growth rate from 2023 to 2028.
For the next financial year, easyJet expects 3% seat capacity growth with nine Airbus deliveries planned. The company aims to increase average sector length by 5%, focusing on longer leisure routes. This strategy targets areas with high demand and returns, which could potentially improve winter use while maintaining a strong performance in summer.
Though easyJet faced some supply chain issues, receiving 16 aircraft instead of 19 this year, its choice of Airbus planes with CFM engines and flexible approach helped it to manage disruptions better than some competitors.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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