easyJet has reported a loss in its year-end finances. Many airlines had struggled to make ends meet due to the pandemic and the subsequent staff shortage when demand returned after the pandemic. easyJet is no exception. However, unlike many airlines, such as British Airways and many North American Airlines, easyJet‘s financial performance has resulted in a loss in the 12 months up to September 30th.
easyJet’s Financial Performance
easyJet’s financial performance revealed a reported loss of 208 million pounds. However, the situation still compares well to easyJet’s financial performance in the previous year. At the same time, in 2021, the company made a 1.036 billion pounds loss, showing an improvement in its financial position since pandemic restrictions were lifted.
Many airlines have reported similar patterns; however, most are now making a profit. So what is the story behind the poorer state of easyJet’s financial performance?
In the financial report, easyJet discusses how it has faced “multiple headwinds” due to operational challenges and the war in Ukraine.
Many airlines faced operational challenges due to staff shortages, the costs of getting planes that were effectively in storage back into use and other expenses required to move back into a fully functioning service such as airport costs etc.
In addition, the war in Ukraine has taken a terrible toll as it restricts flights, with airlines having to detour around warzone areas. In addition, fuel cost has rocketed due to the sanctions imposed on Russia, and many airlines have to deal with this.
easyJet’s revenue
In terms of revenue (total money received), easyJet’s financial performance was much better this year than the previous year. Current revenue for this year to September 30th was 5.769 billion pounds. This is a 296% increase from the prior year, where the revenue was 1.458 billion pounds.
This significant increase in revenue shows that easyJet can attract significantly more income from customers now that the pandemic restrictions have been lifted. The reported loss before tax has also been reduced by 80%. These figures highlight the fact that easyJet’s financial performance has been dramatically affected by increases in costs.
easyJet’s Chief Executive Johan Lundgren has said that the company is going to be focusing on customer growth as well as cost. So it does appear that in terms of easyJet’s financial performance, there is top-level support for reducing costs in the company.
On a positive note, Lundgren also comments that the company’s EBITDAR (earnings before interest, tax depreciation, amortisation and restructuring costs) has reached a record high in this quarter at 674 million pounds, meaning, in terms of actual cash made during the fourth quarter (when you discount any non-cash reductions in value to, for example, a devaluation in the value of easyJet’s planes), it does appear that the company is doing well.
The company is still making losses, but its losses are less than in the previous year. It has cited reasons for why it is making losses, including the war in Ukraine as well as other operational challenges. In terms of revenue, the company does appear to be receiving more money from customers, showing its financial performance is improving. We will have to see how this progresses.
