easyJet Provides Q3 Trading Update; Shares Jump

easyJet (EJTTF) said today that with European tourism opening up and traveling restrictions being relaxed, traveling capacity in Q4 is expected to reach 60% of 2019 levels, showing growth of 17% over third-quarter levels. Shares were up 2.3% in pre-market trading at the time of writing. (See easyJet stock charts on TipRanks)

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Revenue for the third quarter showed a significant increase at £212.9 million compared to the prior-year period’s revenue of £7.2 million. The loss before tax declined 8.2% year over year to £318.3 million.

By following a disciplined cost and cash management approach, the company was able to reduce its cash burn to £55 million during the quarter and has also limited its fixed costs plus capex to £34 million per week on average (compared to the £40 million guided in Q1).

During the quarter, easyJet flew 17% of its Q3 2019 capacity. The company is switching its focus for the upcoming summer travel season from U.K. to E.U. destinations due to the U.K.’s restricted travel policy.

Moreover, the company has changed its Europe-UK flying ratio from an earlier 50-50 split to the current 60-40.

CEO Johan Lundgren said, “During this quarter we have successfully managed through the continued challenges of the pandemic, using our operational responsiveness to capture demand while focusing on cost control and minimising cash burn.”

The company said that it is confident about the demand for travel this summer and into autumn due to the surge in bookings following the selective easing of travel restrictions. For Q4, 49% of its schedule is already booked, compared to 65% in the same quarter in 2019.

Recently, J.P. Morgan analyst David Perry maintained a Hold rating on the stock with a price target of $12, implying 6.8% upside potential.

Overall, the stock has a Moderate Buy consensus rating based on 5 Buys, 6 Holds, and 1 Sell. The average easyJet price target of $14.09 implies 30.2% upside potential to current levels.