EasyJet Consolidates Positions at Key Hubs While Ramping Up for a Recovery by Summer 2022

No-moat EasyJet remains upbeat about its recovery prospects as the group increased its fleet plans by 25 aircraft from previous expectations and is consolidating its position at Gatwick Airport, which is expected to operate a fleet of 79 aircraft compared with 63 precoronavirus. The group also draws attention to its improved capital structure, which saw net debt decrease to GBP 910 million, from GBP 2 billion at the half-year results, and a liquidity position of GBP 4.4 billion largely thanks to the recent GBP 1.2 billion rights issue. During fourth-quarter financial 2021 the group operated 58% of 2019 capacity levels and expects to operate 65% of 2019 capacity levels in first-quarter 2022 as it ramps up to a full recovery in capacity levels by summer 2022. We believe the new omicron variant poses risks to the short-term targets and outlook as the possibility of renewed restrictions in the U.K. and Europe could impact travel demand over coming months. Shares have retreated significantly on the back of the latest COVID-19 developments and are trading well below our GBX 830 fair value estimate. We continue to prefer Wizz Air, which enjoys a better long-term growth trajectory.