Proactive Investors - easyJet PLC's (LON:EZJ) hefty fall in losses in the low-cost airline’s full-year results proved “a clear rebound in financial performance,” said transport analyst Gerald Khoo at Liberum Capital.
Even though “the underlying trend was masked by the Omicron-related restrictions in the first half and operational disruption in the third quarter," according to Khoo, “easyJet has implemented many structural changes that should make it a more profitable airline, all other things being equal, once its capacity returns to pre-pandemic levels”.
“While the economic outlook is uncertain, and there are headwinds from jet fuel costs and exchange rates, we believe the ongoing recovery potential and strategic progress are not fully reflected in the current valuation,” he concluded.
Structural improvements include an uptick in seasonal pilot contracts, the seizing of slot opportunities at congested airports to allocate additional aircraft to more profitable bases, and improvements in ancillary revenue products including easyJet Holidays.
Liberum reiterated its 'Buy' rating with a target price of 430p against the current share price of 387.20p, which the analyst said “more than reflects the external risks, while giving little credit for the strategic progress made by the group”.