easyJet plc (EZJ) Ordinary 27 2/7p
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(1.51%)
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7.30p
(1.51%)
Deal for just £11.95 per trade in a
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Lifetime ISA
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Fund and Share Account
HL comment (25 November 2025)
No recommendation - No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
easyJet’s full-year revenue rose 9% to £10.1bn (as expected). All business areas saw growth, with the Holidays segment expanding at the fastest pace, up 27%. Increased airline revenue was helped by capacity growth and fuller planes.
Pre-tax profit also grew by 9% to £665mn (£653mn expected). The uplift was driven entirely by the Holidays segment as ongoing investment in the Airlines business weighed on performance.
Free cash flow improved by £54mn to £717mn. The net cash position increased by £421mn to £602mn.
In the first half of 2026, losses are likely to get worse as investment in its Airlines segment continues. Full-year capacity is expected to grow by around 7%.
A final dividend of 13.2p per share was announced, up 9%.
The shares fell 1.1% in early trading.
Our view
easyJet delivered a strong finish to the year, with favourable fuel prices helping profits land ahead of expectations. Booking momentum for the new year is positive, but ongoing investment to get new strategic bases in Milan and Rome up and running means losses this winter are likely to worsen.
The no-frills airline is doing a great job of growing its fleet, stimulating demand, and keeping costs under control. On average, more of the available seats are being filled too. Given the high fixed costs associated with flying planes, keeping them as full as possible is key to profitability.
Selling extras to existing passengers is a key part of the success story too. So-called ancillary revenues are things like extra baggage, legroom and food. This is a highly lucrative area, and the growth has been impressive.
easyJet's ability to sell these add-ons and encourage strong demand stems from its route strategy. It focuses on profitable Western European routes within major airports. It's also invested heavily in bolstering its presence at these major airports while adding new desirable destinations to its offering. This approach sets easyJet apart from other low-cost carriers - who trim costs by flying in and out of smaller, less convenient airports.
The package holiday arm continues to deliver impressive growth. Revenue is growing at high double-digit rates and pre-tax profits have hit targets ahead of schedule, now accounting for more than a third of the group’s total. Market share gains have continued, and given that the addressable market for package holidays is huge, we see a long runway ahead for this segment if it can keep nailing delivery.
The balance sheet is in good shape, with substantial financial bandwidth to help support the prospective 3.1% dividend yield. If recently upgraded mid-term targets are hit, we think there could be room for share buybacks or special dividends. But as always, shareholder returns aren't guaranteed.
Something to consider is ongoing geopolitical tension, which has the potential to escalate and impact bookings. This hasn't dented investor sentiment, but as with any situation like this, that can change at short notice.
We think easyJet is well-placed within its sector and comes with growth opportunities that aren’t baked into the current valuation. But there’s tough competition, and the current investment plans bring increased operational risks in the short term.
Environmental, social and governance (ESG) risk
The transport industry is medium risk in terms of ESG, with European firms managing them better than others. Carbon emissions, product governance, and quality & safety are the biggest risk drivers. Other key areas are emissions, effluents & waste, labour relations, and employee health & safety.
According to Sustainalytics, easyJet’s management of ESG risk is strong.
Its policy addressing environmental issues is very strong and executive remuneration is explicitly linked to sustainability performance targets. An adequate whistleblower policy is also in place. However, easyJet’s overall ESG reporting falls short of best practice.
easyJet key facts
Forward price/book ratio (next 12 months): 0.93
Ten year average forward price/book ratio: 1.49
Prospective dividend yield (next 12 months): 3.1%
Ten year average prospective dividend yield: 3.1%
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.
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