Shares in EasyJet are trading higher this afternoon after the company managed to cut its losses in the final three months of last year, but investors could be forgiven for wondering how long it will take for the budget carrier's stock to catch up with that of its rivals.

In a trading update issued this morning EasyJet chief executive Johan Lundgren highlighted a 48% increase in package holiday customers compared to the same period a year earlier. Flight and holiday bookings "took off strongly" during the traditionally busy turn of the year sales period when many opt to nail down their summer holiday plans.

READ MORE: EasyJet expands in Glasgow as it roars back into profit

The Luton-based airline recorded a pre-tax loss of £126 million between October and December, which is the first quarter of its financial year. This was down from a loss of £133m during the same period in 2022, and comes after last year's record summer performance propelled EasyJet back into annual profitability and the resumption of dividend payments.

The return of the dividend back in November has been a catalyst for some solid share price gains, but despite this positive momentum the company's stock remains more than 50% below pre-pandemic levels. While the fall to 10-year lows in 2022 in the wake of extended travel restrictions was in keeping with the rest of the industry, EasyJet's shares haven't rebounded to anywhere near the same degree as those of Ryanair which have recovered all of their post-pandemic decline and managed to post new record highs at the end of last year.

So there is still plenty of scope for improvement, as witnessed this afternoon with the stock currently more than 3% higher even though EasyJet has taken a £40m hit to trading from the Hamas-Israel conflict.

Like last year EasyJet appears to be banking on a strong second half to offset losses in the first six months of the financial year. This will be driven by its holidays business, which is expected to grow by 35% as consumers continue to prioritise vacations despite the continuing cost-of-living crisis.