While first half losses widened, chief executive Kenton Jarvis believes the carrier is ready to gain from improved utilisation rates and aircraft up-gauge plans.
EasyJet chief executive Kenton Jarvis believes the carrier remains well positioned to deliver targeted improved financial performance in future winter periods despite posting wider losses for the six months to March 2026.
The UK low-cost carrier’s first half, which runs over the winter season from October to March, is traditionally a loss-making period in which EasyJet has only once stayed out of the red. The airline had identified reducing seasonal losses as a key element in delivering its medium-term target of exceeding annual pre-tax profits of £1 billion ($1.34 billion).
However, EasyJet’s headline first-half pre-tax loss widened to £552 million, from £394 million in the same period one year ago.
“We clearly recognise that these winter losses are not where we planned them to be… and it remains a focus for us to structurally improve our seasonal losses and bring them down over the coming years,” said Jarvis, speaking during EasyJet’s 21 May earnings call.
He flags the significance of its investments in boosting capacity over the past three winters, which has seen EasyJet increase capacity (in available seat kilometres) around 33%. “Our aircraft utilisation is now 20% higher than it was in 2023,” he says
“The good news there is that we can now moderate our growth as we look forward to the following winters because we have restored that capacity and utilisation and that should allow our route investments to mature.”
Jarvis says the carrier is embarking on a disciplined approach to capital allocation, implementing a “hurdle rate” of £2.5 million in pre-tax profit per aircraft and ensuring jets are deployed at bases that perform best. “Our aim is to drive a tangible improvement in our margin performance as we move away from the current position to a more-normalised environment,” he says.
EasyJet has also made progress up-gauging its fleet by replacing smaller Airbus A319s with new, larger A320neo-family jets – another pillar of its profitability drive.
“Following all the delays we have seen at the OEMs, the good news is the up-gauging now moves to the near term. That’s really important because that is one of the things that has been moving to the right,” he says.
The carrier is set to receive 80 A320neos and A321neos over the next three financial years and to retire 57 aircraft over the same period, which would take its fleet from 356 aircraft last October to 389 by September 2028. While it is still firming up delivery plans for 2029, EasyJet is now accelerating retirements of its remaining 80 A319s.
“Airbus are firming up on those deliveries. Yes, they are slipping a bit, but not structurally. They are slipping one or two months, and we are working through that to manage that in our schedule,” says Jarvis. “But the confidence has grown and that is why we are going to accelerate the retirement of our A319s, and get them all out of our fleet by 2029.”
The fleet plan will generate around £250 million worth of cost efficiencies over the next two financial years, a key lever in EasyJet’s plan to achieve its mid-term profit target, the airline says.
“How much we then trade off with revenue dilution from filling the extra seats, we’ll learn more. It hasn’t been much going from 100 A319s down to 80, but this is all 80 [A319s] effectively in the next three years,” he says.
But while in recent winters EasyJet’s capacity expansion targeted new routes – which take time to mature – jets replacing A319s will largely operate “thickish routes” or at slot-constrained airports, Jarvis says.
Growth of EasyJet Holidays, a third leg of its financial plan, continued in the first half, as profits climbed 39% year on year, with 22% more customers.
MIDDLE EAST IMPACT
While EasyJet’s first half losses increased, they were in line with guidance issued in April. That guidance flagged higher costs amid elevated fuel prices, due to the Middle East conflict and EasyJet’s opening of new bases at Milan Linate and Rome Fiumicino airports.
Jarvis says the carrier expected its Milan and Rome investments would come at a cost given EasyJet secured positions at the airports through “remedy” rights available as part of Lufthansa’s concessions for acquiring Italian carrier ITA Airways.
“We have experience of doing this in the past and over time those routes mature and we fully expect those two airports in Milan and Rome to be great catchment airports and to perform very well for us,” says Jarvis.
The carrier believes it is relatively well-placed on fuel, being 72% hedged this year. And while EasyJet trimmed some capacity on high-traffic routes in April and May, those accounted for just 0.3% of capacity. “Airlines make more than their annual profit in the 12 weeks from July to September and therefore I’d say everything we fly is contribution-positive,” Jarvis says. “Therefore, we are not making any changes to the schedule.”
Jarvis sees wider impact from the Middle East crisis in the form of shorter booking windows. While demand remains “strong” through May, “as you go further out, the consumer uncertainty is meaning people are waiting before they are making that booking,” he says.
One contributing factor in likely consumers’ concerns about fuel shortages, which Jarvis stresses he does not see as a problem this summer.
“We have seen no issues at the 165 airports we fly in and out of,” he says. “We stay in constant contact with airports, governments and fuel suppliers, and what they tell us is that fuel supply is being diversified. That is why confidence is lifting that this summer we will be uninterrupted in our flying programme.
“Hopefully as these concerns on [fuel] supply are alleviating, at least for this summer, we will see people coming back earlier.”
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