Is now the time to buy easyJet shares?

Female analyst sat at desk looking at pie charts on paper

easyJet (LSE: EZJ) shares have been through plenty of turbulence of late. With its operations halted by the Covid-19 pandemic, the business now faces the struggles of a cost-of-living crisis fuelled by racing inflation.

As a result, the easyJet share price has been pegged back by nearly 40% this year. In fact, over the last five years, the stock has plummeted 65%.

So, with the release of its Q3 trading update yesterday, is now the time to buy?

easyJet performance

The tough times the business has been encountering were reflected yesterday in its trading update. For the three months to 30 June, easyJet saw headline losses of £114m.

The main attributor to this was the recent disruptions and cancellations seen across airports of late, as this made up a £133m hit for the business.

The losses seen are significantly better than the £318m for the same period last year. But with passenger numbers jumping more than seven times during this time, to 22m, this shows the effect airport turmoil is having on easyJet.

However, it’s not all bad news. The increase in passengers equated to 87% of FY19 capacity, showing that the sector is slowly but surely recovering back to pre-pandemic levels. easyJet also said its load factors were on the up, peaking at 92% in June.

Looking forward, it also stated that Q4 is currently 71% booked, while sold ticket yield for the period is 13% above FY19.

Is it time to buy?

Despite headwinds, easyJet seems to be edging somewhat closer to its pre-pandemic capabilities. So, is it time to buy some shares?

One area where the business may suffer is rising fuel costs. It has some level of protection as it has hedged part of its supplies up until the end of FY23. However, with the sad war in Ukraine pushing up oil prices, I can still see rising costs having a substantial impact on easyJet’s margins.

It also alluded to how it has “taken action to build the additional resilience needed this summer” as staff shortages have seen operations impacted. How this plays out for the rest of the year is unknown. We’re still seeing delays and cancellations at hubs. And should this drag on later into 2022, this could drive down the easyJet share price.

The cost-of-living crisis may also see demand slow. With inflation set to continue to rise, consumers may be deterred from booking trips away. The crisis has also led to calls from easyJet staff for higher wages.

With all this said, I like the smart moves the business is making for the times ahead. It recently announced an agreement to purchase 56 Airbus A320neo aircraft between FY26 and FY29. And on top of this, it’s also tweaked previous orders to newer, more fuel-efficient aircraft. This is a smart play.

However, I still won’t be buying shares today. The stock has taken a beating this year, but I’m not sure if it’s done yet.

Should its price slip further, I’d be tempted to buy. For now, I’ll be holding off.

The post Is now the time to buy easyJet shares? appeared first on The Motley Fool UK.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.