EasyJet (LSE:EZJ) reported a sharp decline in third-quarter headline profit before tax as higher fuel prices and softer demand following the conflict in the Middle East offset continued strength in leisure travel. Headline profit before tax fell to £85 million from £286 million a year earlier, while the airline carried 25.8 million passengers during the quarter with a load factor of 88.9%. Although unit revenue eased slightly and higher fuel costs reduced margins, non-fuel unit costs remained broadly in line with management guidance.
Holidays business and operational improvements support strategy
The airline said operational performance continued to improve, with higher on-time performance and stronger customer satisfaction scores helping reinforce its brand ahead of the peak summer season.
EasyJet holidays remained a key contributor to earnings, delivering £84 million of profit before tax while continuing to grow its customer base. The group also announced new commercial partnerships with Expedia, expanded its retail distribution network in Germany and continued implementing management changes alongside digital initiatives and aircraft upgauging to improve efficiency, generate additional revenue and support its medium-term profitability targets.
Capacity growth planned despite cost headwinds
Looking ahead, EasyJet plans to increase seat capacity by around 3% during FY26 and expects low double-digit growth in EasyJet holidays customers as it continues to gain market share across the European travel market.
Management acknowledged that profitability remains sensitive to fuel price movements and late booking patterns. However, the company said early indicators for first-quarter 2027 yields are encouraging, while ongoing cost-saving measures, including the introduction of larger aircraft and increased automation, are expected to support stronger earnings as market conditions stabilise.
Outlook balanced by strong momentum and external risks
EasyJet’s outlook is supported by improving underlying profitability, a stable balance sheet and positive management commentary highlighting strong liquidity and continued efficiency initiatives. However, weaker free cash flow trends, elevated fuel costs and softer forward demand remain important risks.
Technical indicators remain supportive, with the shares trading above key moving averages and maintaining positive momentum, although an elevated RSI suggests the stock may be approaching overbought territory. Valuation remains broadly reasonable, with the shares trading on a price-to-earnings ratio of around 12 and offering a dividend yield of approximately 2%.
About EasyJet
EasyJet is a low-cost airline group operating short-haul routes across Europe and the Mediterranean. Alongside its point-to-point airline, the company has developed an integrated holidays business offering package holidays through a capital-light model supported by a growing network of hotel and travel partners. EasyJet focuses on serving both leisure and business travellers while expanding ancillary revenue and improving operational efficiency.
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