There is no sign of a slowdown in holiday bookings and revenues remain strong, according to the UK’s three most popular airlines, which said trading had held up in the face of political instability and the cost of living crisis.
British Airways’ owner, IAG, said there was “no indication of weakness” in bookings, as it guided higher than expected profits, while both Ryanair and easyJet said they were confident customers would continue to book with them in the year ahead.
Michael O’Leary, the chief executive of Ryanair, said bookings were surprisingly strong, adding: “We thought they would begin to ease off but actually forward bookings into the mid-term and into Christmas are stronger in terms of volume and pricing than they were pre-Covid.”
He said he remained concerned the financial turmoil since the mini-budget would hit people’s disposable income. “There are clearly question marks over the competence of the UK government, the UK financial system, there is lots of uncertainty out there,” he said.
EasyJet said it wants more “certainty” and “stability” in the UK, but expects demand for its lower-cost fares to hold up despite the cost of living crisis.
Johan Lundgren, the airline’s chief executive, said consumers “would continue to protect their holidays” where they could even as their income was squeezed by surging food and energy bills. That meant they would “gravitate towards value”, he added.
“Despite the difficulties that households have, we still know that holidays and travel are on the top of the list when people prioritise what they want to do with their disposable income,” he said on Thursday.
“We do well in tough economic times. Our low cost-base delivers an advantage that our main competitors, legacy carriers, cannot match. And we think that they will struggle in this high-cost environment,” Lundgren said.
“All of this combined, provides us with great confidence in our plans to deliver in the coming year and beyond.”
Last month’s UK market meltdown sent the pound to record lows and raised the cost of borrowing after the government’s mini-budget, which featured unfunded tax cuts that raised fears over the UK’s economic outlook.
EasyJet’s boss said the airline had been affected by the plunge in sterling, given that some of the company’s costs and debt were in euros and dollars.
“I would like to see that there’s certainty, that there’s stability, and we get back to the point … where we get the pound stronger,” he continued, adding: “Clearly there is uncertainty out there and we just need to see what that will lead to.”
His comments come as easyJet said it was likely to report a smaller pre-tax loss of between £170m and £190m for the year to 30 September. While it leaves the airline in the red, it marks a significant improvement from a year earlier when easyJet logged a £1.1bn loss for 2021, as airlines grappled with Covid travel restrictions.
The smaller loss this year includes a £75m hit linked to travel disruption caused in part by staffing shortages after job cuts during the pandemic. EasyJet’s trading update for the full year to 30 September also accounted for the impact on travel of the Omicron variant as well as the war in Ukraine, which has caused energy costs to soar, including for the airline’s own customers.
IAG also said that forward bookings remained at expected levels “with no indication of weakness”, despite the economic turmoil. Its shares rose by 6% after the airline group issued a market update that said profits for the summer months were now expected to be about €1.2bn (£1bn) – about 50% higher than City analysts’ consensus. This was “due to passenger revenue strength”, it added.