easyJet PLC (LSE:EZJ) plans to issue a new trading update for the third quarter of fiscal 2022 tomorrow.
Investors' minds will be focused on operational performance after the budget airline reduced its summer capacity forecasts this June.
In its latest trading update, the airline said it reached 87% of its pre-Covid 19 flight capacity in the third quarter, down from prior expectations of 90%.
Like many airline operators, it has faced air traffic control delays and increased costs as the industry battles staff shortages, with ID check times adding to operational difficulties.
Although capacity figures beat the 67% recorded in the second quarter of this financial year, the airline also lowered its capacity forecast to 90% of pre-pandemic levels in the fourth quarter, down from prior estimates of 97%.
The market consensus for easyJet’s revenue for the third quarter is £1.7 billion, up from £213mln the prior year.
According to an analyst note published on Friday, UBS analysts predict it will generate £1.6bn of turnover for the period, slightly below the consensus, and recommend easyJet shares as a 'buy' on a price target of 805p.
UBS analysts said that easyJet's pricing is 2% higher than before Covid-19 and that ex-fuel cost delivery was “weaker”.
At its half-yearly results, easyJet said it was 71% hedged for fuel in the second half of the year at US$619 per metric tonne.
“We do not expect 4Q22 schedules to adjust materially given the previous update, but we believe operational performance will be key,” UBS analysts said.
The results come amid further speculation that Wizz Air Holdings PLC (AIM:WIZZ) could acquire the airline.
Allegra Dawes, senior analyst at global primary research firm Third Bridge, said in an analyst note yesterday that such an acquisition could go ahead after easyJet rejected an approach from Wizz Air last year.
The low-cost airline’s biggest shareholder Stelios Haji-Ioannou meanwhile reportedly plans to vote in favour of an eye-watering US$6.5bn plane order that the airline intends to make for 56 new Airbus models.