EasyJet Earnings: Winter Losses Persist Despite Strong Demand and Holiday Growth

Key Morningstar Metrics for easyJet

• Fair Value Estimate
  : GBX 670
• Morningstar Rating
  : ★★★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : High

What We Thought of easyJet’s Earnings

EasyJet’s EZJ first half saw airline passengers up 6% on 4% more seats, with load factors rising to 90%, EasyJet Holidays passengers up 22%, and profit at £61 million, while cost per seat rose 5%, including a £25 million fuel hit from the Middle East.

Why it matters: EasyJet’s cost base is still adjusting after heavy winter growth and resilience investment, but winter losses remained above management’s 2023 targets due to fuel volatility, leisure overcapacity, and Italian expansion costs. The Middle East fuel shock and a shorter booking curve complicate the near-term earnings picture.

• Cost per seat excluding fuel rose 8% in the first half on higher airport fees, wages, resilience, and new Italian base costs, but management expects low-single-digit growth in the summer and is leaning on up-gauging, moderated winter growth, and tighter capital allocation to bend costs down over 2027-28.
• Summer demand is strong, with the booking gap last year in the third quarter now only about 1 percentage point, while the fourth quarter is still behind. EasyJet says this mainly reflects a shorter booking window, not a lack of demand, and is trying to avoid cutting prices too early.

The bottom line: We maintain our GBX 670 fair value estimate and no-moat rating. EasyJet is improving capital discipline and cost levers, but near-term earnings will hinge on executing the up-gauging and cost-efficiency plans while holding pricing into a later booking cycle.

• EasyJet plans a more moderate winter after three years of heavy growth, with aircraft utilization back above pre-covid levels; this should lower incremental winter investment costs, let new routes like Rome and Milan mature, and help ease cost per seat growth over time.
• The Middle East conflict added about £25 million in extra fuel costs and more price volatility, but EasyJet does not expect flight disruption this summer and is managing the risk with high fuel hedging, lower capacity growth, and strong cash and credit lines.