EasyJet set for smooth flying in 2020

With their sustainability programme and new holiday business, EasyJet seem to be pleasing investors

Article updated: 21 January 2020 11:00am Author: Joe Healey

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  • Group reports revenue rose by 9.9% to £1.425bn in the final quarter, putting them in a strong position going into 2020
  • Passenger numbers grew by 2.8% in the quarter, spurred by the collapse of rival Thomas Cook back in September
  • Airline reports solid bookings for the first half of 2020 with roughly 75% of seats now booked and Group upgrades H1 guidance for revenue per seat to grow by the mid-high single digits
  • The carrier’s shares rose over 4% in early trading
  • Recommendation: With the airline industry still facing a combination of uncertainty over Brexit and headwinds in Europe which is likely to hamper progress in the shorter term, we maintain our ‘Hold’ recommendation on the shares

EasyJet’s update this morning shows a strong start to 2020 with total group revenues up by 9.9% in the three months to December. Passenger numbers grew by 2.8% in the quarter, spurred by the collapse of rival Thomas Cook back in September. The airline seem to have solid bookings for the first half of 2020 with roughly 75% of their seats now booked, and the group have upgraded their H1 guidance for revenue per seat to grow by the mid-high single digits. Costs remained relatively in line with expectations.

These results are positive considering the trouble surrounding the French industrial action experienced in December which could have easily knocked the airline off course. 813 flights were forced to cancel, which has slightly dented expected capacity growth by 0.2% for H1. Despite this the group’s ongoing cost initiatives through its Operational Resilience programme helped offset some of this impact.

Investors will welcome the improved satisfaction from customers as a result of their sustainability programme and the successful launch of their new holiday business announced back in November which seems to have integrated well according to customer surveys. Overall, this is a solid start to an interesting year for EasyJet.

We currently view the stock as a ‘Hold’ for investors willing to accept medium risk considering the airline still faces a combination of uncertainty over Brexit and headwinds in Europe which is likely to hamper progress in the shorter term.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

 

Joe Healey

Investment Research Analyst

Following his completion of the graduate scheme, Joe is an Investment Research Analyst covering equities. He holds a BA Hons Business Management degree and is currently studying towards CFA Level II after passing CFA Level I in June 2019.

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