EasyJet maintains its outlook despite a sharp decline in profit

EasyJet reported a significant drop in its pre-tax profit for the third quarter, which came in at £85 million, compared with £286 million a year earlier. The decline was mainly driven by the impact of tensions in the Middle East on bookings, as well as higher jet fuel prices.

Speaking to Le Temps, Christina Carlsten, Fund Manager and Analyst at Piguet Galland, explains that these geopolitical tensions are affecting the airline industry in two ways: they are increasing fuel costs while also encouraging consumers, faced with ongoing geopolitical uncertainty, to delay booking their flights until the last minute.

Results that should be viewed in context

Despite the sharp decline in profit, Christina Carlsten believes these results should be considered in their proper context.

The published figures exceeded market expectations, and EasyJet maintained its full-year outlook, unlike Ryanair, which withdrew its guidance due to the lack of visibility. Following the announcement, EasyJet's share price rose by 5%, while Ryanair's shares came under pressure.

A business model that retains its strengths

According to Christina Carlsten, the current challenges are affecting the entire airline industry and do not indicate any deterioration in EasyJet's business model.

The airline continues to benefit from several strengths, including a well-established brand and valuable airport slots at key airports.

The takeover remains the main focus

EasyJet is currently the subject of two takeover bids from US investment funds.

According to Christina Carlsten, the main obstacle at present is the review by the European authorities. She notes that EasyJet's share price fell by 12% when the review was announced and believes that the stock's short-term performance will largely depend on the likelihood of a deal being approved.

Read Christina Carlsten's full interview in Le Temps (french only).