easyJet PLC investors overlooked news that the airline had been impacted by the war in the Middle East during the first quarter as shares climbed over 2% on Wednesday.
Despite announcing a £40 million hit from the war, FTSE 250-listed easyJet said losses had narrowed during the quarter as people continued to fork out on travel despite higher living costs.
“It seems consumers still have the capacity and the will to prioritise spending on their holidays,” AJ Bell analyst Russ Mould said, despite pockets being squeezed.
“How far this can and will run is a big question for all travel-related businesses,” he added.
Indeed, interactive investor analyst Richard Hunter agreed any such downturn in consumer appetite for holidays posed the largest threat to easyJet.
However, “there seems to be an increasing body of evidence to suggest that the family holiday remains almost sacrosanct and outside of normal budgetary restraints,” he noted.
An uptick in fuel costs from any escalation of the war in the Middle East could also cause headwinds, analysts said, given easyJet reported such costs were already 7% higher year-on-year.
easyJet reported 48% customer growth during the three months to December, aiding a reduction in losses from £133 million to £126 million.
Adding first quarter losses were relatively normal for airlines, Mould commented it was easyJet’s reassurance of strong momentum heading into the warmer months which was crucial.
Second-half bookings remain ahead, the airline said, with capacity growth on track to hit 9% over the full year.
This will leave investors keeping an eye on easyJet’s dividend restoration plan, Mould said, after payments returned at the end of the 2023 financial year.
“This will be a key indicator of the company’s confidence in the outlook,” he said.
Shares climbed 2.2% to 519.2p.