Easyjet set for profit bump – but resurgent oil prices could dent future earnings
Easyjet is set to report a further rise in pretax profit this week when the airline delivers its full year trading update on Thursday, but analysts warned that rising oil prices could hurt the firm in the months head.
Easyjet has been bolstered by a record summer season of travel, reporting profit of £203m in July’s third quarter update, while revenue jumped 34 per cent to £2.4bn.
Analysts at Hargreaves Lansdown credited not just the travel boom for the bumper performance but also the group’s “impressive” ancillary revenues, which include sales of extra baggage slots, legroom and food.
Analysts are forecasting 42 per cent sales growth to £8.2bn and a further rise in pre-tax profits to £552m.
While its share price has soared over 50 per cent since the beginning of January, it has not been a turbulence-free year for the airline.
Thursday’s update will likely reveal the impacts of ongoing air traffic control disruption across Europe, including the unprecedented system-wide failure at the UK’s National Air Traffic Service (NATs) in August.
Investors should also be wary of “resurgent oil prices” over the latter half of summer, AJ Bell’s investment director Russ Mould said, as it could raise costs and crimp consumer spending.
Mould added, however, that current profit forecasts are still a long way from the 2015 “all time high” of £686m, which might indicate why “shares are still well below the peak seen back then.”