Revenues from selling package holidays at EasyJet surged in the final three months of last year helping the budget operator to trim its losses despite taking a £40 million hit from the Hamas-Israel conflict.

The holidays business, launched in November 2019, more than doubled profits from £13m to £30m between October and December, which is the first quarter in the company's financial year. Revenues nearly doubled to £181m as customer numbers were up 48% year-on-year.

The company's mainstay airline business recorded a 14% increase in passenger numbers to 19.8 million, with revenues 16% higher at £1.1 billion. There was also a 20% increase in revenue from "ancillaries" - baggage charges and onboard catering - to £468m.

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The airline reported a pre-tax loss of £126m on total revenues of £1.8bn, an improvement on the £133m loss during the same period in 2022. Airlines typically record seasonal winter losses as demand for holidays and flights drops. 

EasyJet expects to suffer a "direct impact" of £40m in the six months to the end of March due to the war between Israel and Hamas. The airline was one of a number of carriers that paused flights to Israel and nearby Jordan following the outbreak of the conflict on October 7, and these flights have yet to resume.

The conflict also led to a softening in demand for trips to Egypt, though chief executive Johan Lundgren said there have been clear signs of recovery in Egypt since the end of November.

EasyJet maintained its guidance of 35% growth in its holidays business in 2024, which would take its UK market share to 7%.

"We delivered an improved performance in the quarter which is testament to the strength of demand for our brand and network," Mr Lundgren said. "The popularity of easyJet holidays also continues to grow, with 48% more customers in the period.

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"We see positive booking momentum for summer 2024 with travel remaining a priority for consumers. Flight and holidays bookings took off strongly during the traditional busy turn of year sales period, as customers opted to secure their summer holidays to firm favourites like Spain and Portugal alongside destinations further afield like Greece and Turkey."

John Moore, senior investment manager at RBC Brewin Dolphin, said EasyJet has taken a hit from the conflict in the Middle East but still has a lot of positive momentum behind it.

"Losses have narrowed slightly on last year and were expected, given the seasonality of its business," he said. "Costs are slightly up, largely because of the rising price of fuel, but revenue per seat continues to improve and EasyJet’s holidays business is contributing more to the bottom line.

"Consumers are prioritising their holidays, despite the cost of living, which is good news for easyJet and is helping underpin a relatively positive outlook."

Shares in EasyJet closed yesterday's trading 12p higher at 520p, an increase of nearly 2.4%.