AIRLINE and holiday company easyJet is confident that demand for travel will remain strong this summer despite higher fuel costs and recording heavy losses over the winter, the second worst since it was founded in 1995.

The Luton-based budget carrier, which this week suspended flights to Tel Aviv for the next six months following Iran’s missile and drone attack against Israel at the weekend, still reduced its winter losses by at least £50 million and said it expects pre-tax losses of between £340 and £360 for the six months to the end of March, traditionally a loss-making period for the airline industry.

In a trading update ahead of its half-year results, easyJet attributed the improvement in its first-half “seasonal” losses to “targeted capacity growth where demand was strongest, alongside productivity and utilisation benefits which enabled ex-fuel unit costs to remain flat year on year.

Strong demand for holidays sees easyJet’s profits soar

Admitting that the ongoing conflict in the Middle East had resulted in a “deep impact” of about £40m, easyJet said that its limited capacity on routes in the region, including Egypt, accounts for a smaller fraction of its operations in summer, down to 0.3% from about 4% in the winter months. This capacity, it confirmed, was being deployed across its network.

Meanwhile, the low-cost airline’s first-half profits were boosted by an early Easter. “Easter demand was particularly strong, benefiting March due to its early timing,” the company stated. “Operational performance was good with peak daily flights broadly in line with summer levels.”

It also revealed that its easyJet Holidays division has grown by 35% year on year and is 70% booked for summer. “We continue to drive growth at easyJet holidays, with £31m of profit before tax (+206% compared to its first half 2023) and 42% customer growth year on year,” easyJet said.

Launched back in 2019, easyJet Holidays’ growth was thwarted by Covid but it is now on a strong upward trajectory as holidaymakers seek respite from the cost of living crisis and prioritise travelling for discretionary spend – choosing low-cost airlines and brands which provide good value for money.

Johan Lundgren, CEO of easyJet, said: “The importance that consumers place on travel coupled with easyJet’s trusted brand has driven good demand for our flights and holidays. Our growth and focus on productivity have reduced winter losses by more than £50m.”

EasyJet suspends Israel flights until October

Noting that the airline has “further enhanced our network with the launch of new bases in Alicante and Birmingham providing greater choice for consumers across Europe”, he added: “We are well set up operationally for this summer season where we expect easyJet to be one of the fastest-growing major airlines in Europe and take more customers on easyJet holidays than ever before.”

Analysts reacted positively to the airline’s trading update, with John Moore, senior investment manager at RBC Brewin Dolphin, noting that “overall, easyJet is well capitalised, efficient, and growing through add-on services such as its easyJet Holidays business”.

He added: “EasyJet has narrowed losses for this half of the year, which is generally slower due to the seasonality of travel. The airline has continued on its positive course of the last 18 months, buoyed by strong demand for holidays, while geopolitical tension in the Middle East should have limited impact.”

easyJet puts thousands of Scotland flights on sale

Mr Moore said that while there are fears that the current level of demand for customers is a temporary boost for travel companies, with the share prices of some airlines failing to take off post-Covid, “it seems likely consumers will continue to prioritise getting away”. He added: “While easyJet’s shares have made up some ground in recent months, they still remain way off where they were in February 2020 and, by most metrics, look very cheap relative to the wider UK market.”

At the end of last year, easyJet announced plans to increase its presence in Scotland by basing a sixth aircraft at Glasgow Airport following its busiest-ever summer programme north of the Border.

In May, it will launch new routes to Enfidha in Tunisia and Larnaca in Cyprus. From June, it will resume flights from Glasgow to destinations including Marseille in France and Pula, Croatia.

Shares in easyJet rose nearly 3% in early trading on Thursday.