EasyJet is reporting a similar upturn after a six-week hit on demand for bookings from the impact of the Israel-Palestine conflict as it saw following Russia’s invasion of Ukraine last year.

The UK low-cost carrier today cited the temporary hit on demand, together with higher fuel costs, as reasons why it is unlikely to be able to cut losses in the first quarter of its financial year – the three months ending December 2023.

EasyJet aircraft at Luton airport Oct 2021

Source: Graham Dunn/FlightGlobal

EasyJet reported a headline pre-tax profit of £455 millon for the year ended September 2023

However it struck a more positive note for the financial year as a whole, particularly for next summer, where it believes aircraft capacity issues facing rival carriers will give it a competitive edge over the peak travel period.

EasyJet has suspended its flights to Israel and Jordan until early January following the outbreak of hostilities in Gaza last month. These flights, together with its Egypt operations, account for 4% of the airline’s capacity – or 10% in terms of ASKs, given that they cover relatively long sectors.

Speaking on a results call on 28 November, after confirming the airline’s first full-year profit since the pandemic, EasyJet chief executive Johan Lundgren said: ”We are now seven weeks and a couple of days after [the start of hostilities] and it almost follows identically the pattern that we saw when Russia invaded Ukraine. A hit across the network. And when it comes to Ukraine we didn’t even fly into Ukraine – but it had the same affect on the network.

“But then from week five and six, it’s starting to gradually improve. We are looking at trading now on a daily basis, it’s actually very strong – even in the very near term.

”And it never had an affect really into the peak periods of 2024. So this is where we take some confidence on this that it never impacted the peak periods in 2024 and it followed the same booking pattern that we saw after the invasion of Ukraine.”

Both Lundgren and chief financial officer Kenton Jarvis highlight that EasyJet had enjoyed a strong start to October before the Middle East conflict erupted, noting that revenue per seat was running 12% higher. While that meant a strong October, as it was 80% sold for the month before any impact, bookings for November and December have been hit by the lower demand environment.

Given fuel is around 18% higher over this period, the airline does not now expect to improve on the £133 million ($168 million) loss it made in the first quarter of its 2023 financial year.

”Now Q2 [January to March 2024] is different,” notes Jarvis. “We are 25% sold for Q2. As we start to see the recovery we are seeing now, we obviously have more of Q2 ahead of us. And fuel will be up 2% or 3%, not the 18% we are seeing in the first quarter.

”We will have to see about the speed of recovery in Q2,” he says, noting: ”We are starting to see RPS going back ahead, after having had a little dip for six weeks. So cumulatively, yield ahead, load factor ahead and that is on a 9% growth in capacity.

“Then I think we are all looking forward to the summer,” he adds. ”We are not seeing much ability for competitors to grow with what is happening with the Pratt & Whitney [PW1100G] engine and the length of time it’s going to take for them to go through the shops. So we are seeing [competitor] capacity looks pretty flat for the summer, fuel is trending down, so we are pretty encouraged by what we see for the summer.”

Lundgren adds he sees a ”very positive outlook” for 2024 given the limited competitive growth. ”We don’t think anyone will grow as much as we will, when you look at the profitable summer period.”

EasyJet chief commercial officer Sophie Dekkers says the airline has now redeployed its Israel and Jordan capacity elsewhere across the network, but expects a quick recovery once it is able to restore Tel Aviv flights.

“Certainly we have been able to use that capacity to fill the gaps, but we will keep a rolling view on Tel Aviv,” she says.

”At the moment we have slot alleviation for the whole of the winter into Tel Aviv, but what we don’t want to do is pre-empt anything into the summer, because as soon as there is stability there, it will come back very quickly.

”It’s a very strong VFR market, much more resilient than perhaps a long leisure where people have more choice about where they are going to fly. So we think it will bounce back quickly when it does.”