The share price of the budget airline easyJet PLC (GB:EZJ) gained after it reported stellar FY23 results, buoyed by a year of strong travel demand and forward bookings. The airline also announced the return of dividends for the first time since the onset of the pandemic. It declared a dividend of 4.5p per share, equivalent to the distribution of £34 million. The easyJet share price went up by 3.5% yesterday, post-result announcement.
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easyJet reported a profit before tax of £455 million for the fiscal year 2023 ended in September 2023, which exceeded expectations. This also marked a significant turnaround from the previous year’s loss of £178 million. Revenues surged by 42% to reach £8.17 billion, driven by a notable increase in travel demand. Throughout the fiscal year, the airline expanded its network by introducing over 80 new routes. As a result, passenger numbers experienced a robust 19% growth, along with a 21% rise in revenue per seat.
The company also highlighted the impressive results from its holiday division. easyJet Holidays experienced a remarkable 221% profit growth, leading to a pre-tax profit of £122 million.
EasyJet holds a prominent position as a leading airline in Europe, known for its cost-effective services. Operating in 34 countries, the company manages a fleet comprising more than 330 aircraft.
Israel-Hamas War Affects Outlook; easyJet Remains Positive
Over the last few months, European airlines have posted robust financial results. However, the ongoing war between Israel and Hamas and the higher jet fuel prices have tempered their future prospects. Certain investors are expressing caution, suggesting that profits may have reached their peak.
However, easyJet remains positive about the outlook for the upcoming fiscal year. The company pointed to its robust bookings for summer 2024 and supply constraints in Europe as contributing factors. Moreover, it had strategically hedged 76% of its jet fuel requirements for the first half of the 2024 financial year. This proactive measure is intended to provide protection against potential price volatility in the fuel market.
On the flip side, the temporary suspension of flights to Israel and Jordan would likely prevent an improvement in its first-quarter loss of FY24. But the company is already witnessing a recovery in the near-term bookings and searches that were initially impacted by the war.
easyJet Share Price Forecast
As per the consensus among analysts on TipRanks, EZJ stock has been assigned a Moderate Buy rating. The company’s ratings consist of four Buy, five Hold, and one Sell recommendations. The easyJet share price target is 557.1p, which implies an upside potential of 32.4% from the current share price.
