The airline industry has been fidgeting like a bored child stuck indoors on a rainy day.
With countless rules and restrictions to navigate, airlines have been frustrated at not being able to operate in the same way as pre-pandemic.
Finally, the dark clouds are parting and are letting some bright light in. Restrictions are being eased, rules simplified, and travellers are regaining their appetite to fly once again.
EasyJet has declared ‘the recovery is underway’, with losses narrowing and strong enough bookings to warrant increasing capacity for the last three months of 2021.
That’s helped by decent demand for a week in the sun during the October half-term, with individuals eager to get a slice of sea and sun that many were denied this summer and last year.
EasyJet needs to get back on the path to normality as there is only so long it can sustain hefty losses. A £1.2 billion rights issue has given it some breathing room on the financial front, and it is encouraging to see the company generate positive operating cash in the three months to the end of September.
AJ Bell’s Russ Mould said: “There are some obvious negative factors to consider. The fact people are booking flights close to the departure date means limited earnings visibility for the airline. The decision not to pay a dividend may be disappointing to shareholders but shouldn’t really be a surprise. And the lack of financial guidance for the new financial year is annoying but understandable.
“Nonetheless, it does feel as if the airline sector is at a turning point and there are enough positive signs to take a more positive view of the industry’s outlook.
“EasyJet still benefits from a strong brand and a trustworthiness that Ryanair lacks. Ask anyone in the street which they’d rather fly with – EasyJet or Ryanair – and the answer will almost certainly be EasyJet.
“And the fact it is reporting a pick-up in demand from business travel is encouraging.
“First, there was a feeling that business travel could be severely hit as companies realise that web-based conference calls as just as effective as in-person meetings, plus businesses are under pressure to cut flying for environmental reasons.
“Second, EasyJet seeing greater business travel demand could even be the result of companies cutting their spend and telling staff to switch from the traditional airlines of choice like British Airways to cheaper options.”
Leave a Comment