Key points
- A recent trading update shows profit increased five-fold
- easyJet’s passenger capacity and load factor are quickly rising
- More countries are fully reopening their borders without testing or vaccination rules
easyJet (LSE: EZJ) is one of the leaders in the airline industry. Based in the UK, it operates short-haul flights to Europe and North Africa. Like many of its peers, it has not escaped the battering of the Covid-19 pandemic. With the less severe Omicron variant, however, it seems likely that international travel may return to almost pre-pandemic normality. This could have a positive impact on the easyJet share price. Let’s take a closer look.
Encouraging year-on-year results
The firm’s recent trading statement for the three months to 31 December 2021 was something to celebrate. During this period, revenue stood at £805m. This is nearly five times the figure for the same period in 2020, which was only £165m.
Similarly, while the company still reported a loss, it had almost halved. The loss had shrunk from £423m to only £213m. This suggests that the business is largely through the worst of the pandemic. I hope this is soon reflected in the easyJet share price.
Other important metrics for gauging recovery in the airline industry are passenger capacity and load factor, because this shows how many people are flying. For the period, easyJet flew 85,618 flights. This included a load factor of 77%.
A year-on-year comparison reveals that the number of flights for that time in 2020 was only 23,428 with a load factor of just 66%. This marks a significant increase and is a strong indication that the easyJet share price may be approaching clearer skies.
Open borders
Recently, many countries have started the process of reopening borders. Some are even removing testing requirements and vaccination requirements. Sweden has stated that it will permit smooth travel for all EU citizens. Furthermore, Norway is going a step further and reopening for tourists from all around the world.
They might soon be joined by Switzerland. The Swiss Federal Council is in the final stages of consultation that would see all passenger restrictions dropped. A decision is due on 16 February. If these moves come to fruition, I can only see the easyJet share price going up.
There is, however, always the risk of further variants arising. This could delay a return to normal international travel. Nonetheless, S&P Ratings has upgraded the firm “on expectations that European airline traffic was set to continue recovering over the course of 2022”.
The global recovery may do great things to the easyJet share price. With more planes in the sky, the firm will enjoy greater revenue. I fully expect more countries to follow Norway and others, with a return to normal travel in the near term. I will be buying easyJet shares without delay.
Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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