EasyJet Share Price as Aviation Recovery Gathers Steam

The Easyjet share price will be in the spotlight after the company published its trading statement on Tuesday. The EZJ stock closed at 542p on Monday after the firm announced a series of flight cuts even as demand holds steady. The current price is about 30% above the lowest level in March, bringing the company’s market cap to about 4 billion pounds.

EasyJet trading statement review

EasyJet, the giant budget carrier, published an encouraging trading statement for the six months that ended on March 31st. The firm said it managed to reduce its losses sharply, driven by strong demand and other hedging measures. Its capacity has increased to about 80% of FY19 year, helped by softening UK travel restrictions.

The management also provided an update about its limited business in Eastern Europe. It has limited exposure to the region and no flights to Ukraine, Russia, and Belarus. The firm’s limited routes in the region are in Hungary and Poland, which account for 1.4% of its total capacity. The CEO said:

Since travel restrictions were removed, easyJet has seen a strong recovery in trading which has been sustained, resulting in a positive outlook for Easter and beyond, with daily booking volumes for summer currently tracking ahead of those at the same time in FY19.”

EasyJet has grown the number of flights per month this year. For example, the number of flights rose to 18,857, 26,709, and 36,681 in January, February, and March, respectively. As a result, its passengers have also risen to 2.3m, 3.9m, and 5.3m, respectively. This trend will likely continue in the coming months. As a result, it now expects to report a loss before tax of between 535 million and 565 million pounds.

The biggest challenge for the EasyJet share price is that its fuel costs are rising. Nonetheless, hedging is expected to help offset these losses. The firm averaged a fuel price of c.US$599 per metric tonne. It is hedged at 64% for H2 at about c.US$766.

EasyJet share price forecast

The daily chart shows that the EZJ share price has been in a tight range in the past few days. As a result, the stock is trading along with the 25-day and 50-day moving averages. It has also moved slightly above the upper side of the descending channel shown in blue. It also seems like it has formed a head and shoulders pattern.

Therefore, while EasyJet has made a strong recovery, it is likely to have a bearish breakout in the near term. If this happens, the next key support to watch will be at around 450p.