LONDON (ShareCast) - (Sharecast News) - Low cost airline easyJet upgraded forecasts for its holiday division after demand for packaged breaks helped it offset a tough flying market and post a 9% rise in full-year pre-tax earnings to a better-than-expected £655m.
The company said package holidays delivered profits of £250m, hitting its medium-term target early and resulting in a new objective of £450m by 2030. It added that forward bookings for the first quarter of the current year were 81% sold.

Headline operating profit for the 12 months to September 30 also beat expectations, soaring 18% to £703m, higher than the £669m forecast by analysts.

Chief executive Kenton Jarvis said the carrier was well placed to hit its medium-term target of £1bn in pre-tax profits.

The wider geopolitical, economic and competitive environment remained difficult for the airline, especially over the winter. Airline revenue rose 6% to £8.7bn, as easyJet increased capacity by 4% to 104m seats. EasyJet Holidays customers were up 20% to 3.1 million customers, with an expanded hotel range, doubling its UK market share to about 10%.

EasyJet said it had sold 80% of its holiday packages for the first half of the new financial year, with average selling prices up in high single digits. The holidays division made £1.4bn in revenues, an increase of 27%, and £250m profit before tax, achieving this target early.

It also invested £20m into new bases at airports in Milan and Rome with eight aircraft and plans to spend a further £30m this winter at the two locations. Two more new bases will launch next summer, Newcastle in March and its first entry into Africa in Marrakech.

Shares in the company were down on Tuesday, with AJ Bell investment director Russ Mould noting that "limited visibility on the outlook and warnings of cost inflation mean the shares struggled to gain much altitude".

"An acknowledgement that profit in the airline business is not improving as fast as originally anticipated was always likely to be poorly received."

"This remains a challenging sector to operate in thanks to geopolitical tensions, volatile fuel costs and uneven consumer sentiment and there could be further turbulence to come. However, EasyJet looks in decent shape to navigate these challenges thanks to its buoyant holidays business and robust balance sheet."

Reporting by Frank Prenesti for Sharecast.com

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