easyJet, delivering its results for the six months to March 31 last week, declared: “easyJet is well-positioned to deliver strong earnings growth year-on-year, driven by positive summer demand, strong easyJet holidays profit growth and the £61 million reduction in winter losses… “As a trusted brand, easyJet is well-placed to capitalise on the positive demand environment as consumers prioritise travel. We are continuing to expand our primary airport network with 158 new routes launched for the current financial year.”
It was interesting to note the reference to “positive” summer demand, and consumers’ decisions to “prioritise travel”.
Amid the cost of living crisis, which has taken such a toll in recent years and continues to do so, this message from holiday companies and airlines about people prioritising travel has been a consistent one. And it has been borne out by the trading performances of the big players in the overseas travel sector.
József Váradi, chief executive of Wizz Air, declared yesterday as he reported the airline had carried a record 62 million passengers in the year to March 31: “Sustained healthy demand for air travel across our markets was a defining feature…signalling that the surge witnessed post-pandemic has evolved into a longer-term trend in consumer behaviour. Wizz Air has been strongly positioned for this trend as reflected in our performance for the year.”
Johan Lundgren, easyJet’s chief executive, declared last week: “We are now absolutely focused on another record summer, which is expected to deliver strong [full-year] earnings growth and are on track to achieve our medium-term targets.”
easyJet said of its first-half performance: “Total revenue increased by 22% to £3,268 million (H1 2023: £2,689 million) predominantly due to an increased flown capacity, pricing strength and ancillary products including easyJet holidays continuing to deliver incremental revenue. Total airline revenue per seat increased by 5% to £69.87 (H1 2023: £66.46).”
It added: “Passenger revenue increased by 17% to £2,046 million (H1 2023: £1,749 million) as we flew increased levels of capacity compared to the same period last year. Passenger RPS (revenue per seat) increased by 5% to £48.34 (H1 2023: £46.24) as easyJet’s optimised primary airport network continues to drive yield growth as demand remains strong.”
These numbers speak for themselves, with the percentage increases eye-catching, as do the references to strong demand and increased capacity.
TUI last week reported record revenues for the quarter to March, with its UK operation seeing a jump in the volume and price of bookings.
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The holidays and flights operator highlighted strong demand as it reported revenues of 3.6 billion euros for the three months to March, the second quarter of its financial year. This represented a rise of 16% on the same period a year earlier. As with easyJet, this is a notable percentage jump.
TUI said the record revenues reflected “the strength of demand for our product portfolio at improved prices across our businesses”.
And, while noting macroeconomic “uncertainties”, it was positive about the outlook.
It declared: “We see the positive trends in our business continuing in H2, but also recognise the current macroeconomic as well as geopolitical uncertainties especially in the Middle East, with 40% of the summer 2024 left to sell.”
TUI’s trading update made it plain that consumer demand was sufficiently strong to enable price increases, even in these tough economic times.
Revealing how summer 2024 was progressing, TUI declared: “UK sales are 3% ahead, with 65% of the season sold to date. In our other key market, Germany, sales are well ahead at plus-7% with 60% of the season sold.”
Looking at summer 2024 across its business, TUI said: “Bookings for the summer 2024 season continue to be promising, with 60% of the season sold. Bookings taken to date are 5% higher, supported by increased prices, up 4%.”
Susannah Streeter, head of money and markets at stockbroker Hargreaves Lansdown, highlighted TUI customers’ continuing appetite for overseas holidays in spite of the rise in prices.
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She said: “There is…promising momentum for the upcoming season with demand buoyant for the summer – bookings are up 5% and average prices up 4%, with 60% of available holidays sold. The hike in prices isn’t putting off holidaymakers, with families ringfencing budgets for a spot on the sun lounger.”
Package holiday giant Jet2, which like rival TUI has a major airline business, presented a solid trading update late last month.
Commenting on its current financial year to March 31, 2025, Jet2 said: “In summary, we are pleased with our progress for FY25 to date although, as ever, we remain mindful of the current macroeconomic and geopolitical environments and how these may impact future consumer spending. Consequently, and with over 40% of summer 2024 and the majority of winter 2024/2025 seasons still to sell, it is too early to provide guidance as to group profitability for FY25.”
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Like TUI, there is a reference to the macroeconomic backdrop and clearly vigilance on this front.
While it is difficult to know exactly what will happen from here in the sector, what seems clear is that many consumers who are in a position to do so have to date been arranging their finances in a way that has prioritised holidays over other types of spending.
Ryanair this week reported that its passenger numbers rose by 9% to 183.7 million in the year to March, despite Boeing delivery “delays”.
Annual revenues jumped by 25% to 13.44 billion euros.
The average fare increased by 21% to 49.80 euros, fuelled by a record first half of the financial year and strong Easter traffic in late March.
Ryanair said it expected to increase passenger numbers in the current financial year to March 2025 by 8% to between 198 million and 200 million.
Chief executive Michael O’Leary said: “Recent pricing is softer than we expected, with Q1 [of the financial year] requiring more price stimulation than last year, particularly as half of Easter moved into [March] and out of [April]. While visibility is limited, and the outcome will be heavily dependent on close-in peak [summer 2024] pricing, we remain cautiously optimistic that peak [summer 2024] fares will be flat to modestly ahead of last summer.”
He added: “Q4 FY25 will not benefit from an early Easter, as it did in FY24. It is therefore too early to be able to provide sensible or accurate FY25 PAT (profit after tax) guidance.”
The tone from Mr O’Leary seemed quite matter of fact, rather than ebullient.
However, the numbers for the last financial year as well as Ryanair’s projection for passenger growth over the 12 months to March 2025 and its forecast of flat to modestly higher peak summer fares look impressive enough, especially in what are most certainly not the easiest of economic times.
