EasyJet Stock Analysis: Air Travel Bounces Back Post Pandemic

The aviation industry has bounced back in a big way after the pandemic. European budget airlines have led the charge with passenger numbers back to pre-crisis levels. The easyJet share price is a key indicator of this sector's resilience and growth potential. This analysis looks at EasyJet's financials, market position and investment prospects in the new travel landscape.

Aviation Industry Recovery Overview

Global air travel demand is back above pre-pandemic levels in 2024. According to IATA, worldwide passenger traffic was 102.6% of 2019 levels. This has accelerated in 2024 with Q4 traffic at 98.2% of pre-crisis levels.

The industry is looking good for 2025. Total revenues will exceed $1 trillion for the first time in aviation history. Passenger numbers will be 5.2 billion, up 6.7% on 2024.

Regional recovery patterns are very different across markets:

• Europe: Western Europe up 9% in revenue terms vs 2019

• Asia-Pacific: Gradual recovery with China domestic up 7.1% on 2019

• North America: Ahead of 2019 levels throughout 2023

• Africa: 38.7% annual growth

The supply chain headaches aren't going anywhere fast. Both Boeing and Airbus are still running way behind on deliveries, which is frustrating airlines' growth plans. Silver lining though? These bottlenecks actually help current players since they keep supply tight and demand strong. 

EasyJet Financials Analysis

Revenue and Profit Trends

EasyJet knocked it out of the park financially in 2024! They pulled in £9.31 billion in revenue—jumping nearly 14% from last year. Pretty impressive when you look at industry benchmarks, and clearly shows Europeans are flocking back to air travel in a big way.

Operating profits were even better. The company made £610 million in pre-tax profits, up 34% on the previous year. This beat analyst expectations and showed good cost management. EasyJet has managed to balance capacity growth with profit targets.

Key Stats

EasyJet's operational stats are looking good across the board:

Revenue per seat metrics are positive. The airline has pricing power despite competition. Ancillary revenue is a big contributor to overall performance.

Aircraft utilisation has improved. Fleet efficiency is driving margin and route profit across the network.

What's Going on with EasyJet's Stock?

Man, if you've been watching EasyJet shares lately, you've seen quite the rollercoaster! Trust me, I've been keeping tabs on this one. The stock's been bouncing all over the place during recovery, but it's sitting around 542.80p right now – not too shabby considering it tanked to 418p last summer. Kinda impressive how it's held up despite all the market jitters, don't you think?

Year-to-date, we're looking at about a 3.8% gain. Nothing to write home about, honestly, but it shows investors are still a bit nervous about airlines. I mean, can you blame them after everything that's happened? Though I gotta say, their last quarterly report seemed to perk everyone up a bit.

If you're into chart patterns (I dabble a bit myself), the technical signals look promising. The stock finally pushed through those stubborn resistance levels that were holding it back for ages. Seems like it's found its footing with new support zones too. Volume's picking up with the price – always a good sign in my book!

What Are the Experts Saying?

The folks who crunch numbers for a living seem pretty bullish on this one. Let me break down what I've gathered:

Most analysts are targeting between £6.72 and £6.83 – that's a decent 16-25% upside from where we are now. Not bad at all! One particularly optimistic analyst is even throwing out 900p as a possibility. Wouldn't that be something? An 80% jump would make a lot of people very happy!

There are about nine analysts regularly covering EasyJet, and from what I can tell, most are saying either "Buy" or "Hold." They're expecting earnings of around £0.70 per share next year.

Why so positive? Well, seems like they're buying into the post-pandemic recovery story. Even though growth might be slowing down a bit (which is natural after the initial bounce-back), they're still expecting profits to keep climbing. That makes the current price look pretty reasonable, at least in their eyes.

Where's the Growth Coming From?

Holiday Packages – Who Knew?

I've gotta say, I was surprised when I learned how well EasyJet's holiday division is doing! This part of their business has really taken off – up 36% to £247 million in recent results. That's pretty impressive! They're expecting 25% more holiday customers next year too.

What's cool about this approach is that packaging holidays brings in way better margins than just flying people around. Think about it – when you book a whole vacation instead of just a flight, you're spending more and EasyJet gets a bigger piece of the pie. This segment kicked in £43 million in pre-tax profits, up 39% from last year. Not too shabby!

I love how management is leaning into this. Instead of just competing on cheap flights, they're going after folks who want the whole vacation sorted in one go. Smart move, if you ask me – really sets them apart from your basic budget airlines.

Playing the Route Game

Have you noticed how they're adding more flights to sunny getaways? They've been beefing up routes to North Africa and the Canary Islands. Makes total sense – these longer leisure routes bring in more cash than quick hops around Europe. Who doesn't want to escape to somewhere warm?

For next year, they're planning to offer around 103 million seats – roughly 3% more than now. Seems like they're trying to grow, but not so fast that they hurt their bottom line. It's that tricky balance, right?

One advantage they've got is their prime real estate at major airports. Gatwick is still their biggest hub, which gives them a leg up on some competitors. Let's face it – nobody wants to fly from some random airfield an hour outside the city! Having those slots at main airports is a big deal for attracting customers.

What Could Go Wrong? (Because Something Always Does!)

Look, I'm not trying to be a downer, but there are definitely some things that could throw a wrench in the works:

Day-to-day Headaches:

• Fuel prices are all over the place – remember when oil went crazy last year? That can eat into profits fast.

• Boeing and Airbus are still struggling to deliver planes on time. Hard to grow when you can't get new aircraft!

• And don't get me started on weather disruptions – one bad storm and your whole schedule is shot.

Bigger Picture Stuff:

• The European economy is... well, complicated right now. Not exactly booming everywhere.

• People's spending habits keep changing. Are they still prioritizing travel over other things? Who knows!

• Business travel isn't bouncing back as quickly as leisure – and those business tickets usually bring in more money.

Wild Card Factors:

• Geopolitical stuff is always lurking. Remember how quickly routes had to change when that conflict flared up?

• The Middle East situation affects certain destinations pretty directly.

• And regulations seem to change every five minutes – especially around environmental requirements.

To be fair, EasyJet has weathered storms before (literally and figuratively). They've shown they can adapt when they need to. But still – worth keeping these risks in mind if you're thinking about investing.