LONDON (Reuters) -EasyJet said on Wednesday that it expects its capacity to increase by 3% in fiscal 2025 after reporting a smaller-than-expected annual operating profit due to disruptions from the ongoing conflict in the Middle East.

European airlines, such as Lufthansa and Air France-KLM, have struggled this year to varying degrees with limited plane deliveries, engine challenges, spiralling labour costs, flattening ticket prices and moderating demand.

The airline reported an operating profit of 597 million pounds ($750.5 million) for the year ended Sept. 30, compared to 625.6 million pounds expected by analysts, according to an LSEG-compiled poll.

However, its reported operating profit is 25% higher than a year earlier. That is a "significant step towards our goal of sustainably generating over one billion pounds ($1.26 billion) annual profit before tax," said outgoing CEO Johan Lundgren in a statement.

EasyJet has dodged many of the issues that have plagued the sector thanks to its Airbus fleet equipped with CFM engines. It has also avoided the challenges surrounding U.S. plane manufacturer Boeing and engine maker Pratt and Whitney, owned by RTX.

And expectations for the coming year are optimistic, with strong demand set to continue and more interest in easyJet's lucrative packaged holiday business.

For the current fiscal year ending September 2025, the airline expects capacity of about 103 million seats and holiday customers to grow by about 25% from last year.

The airline will continue to grow, particularly on popular longer leisure routes like North Africa and the Canaries and we plan to take 25% more customers away on package holidays," CEO-designate Kenton Jarvis, who is replacing Johan Lundgren next year, said in a statement.

(Reporting by Joanna Plucinska in London and Yadarisa Shabong in Bengaluru; Editing by Sonia Cheema and Louise Heavens)

EasyJet reports weaker annual profit, looks positively towards 2025

By Joanna Plucinska and Yadarisa Shabong

LONDON (Reuters) -EasyJet said on Wednesday that it expects its capacity to increase by 3% in fiscal 2025 after reporting a smaller-than-expected annual operating profit due to disruptions from the ongoing conflict in the Middle East.

European airlines, such as Lufthansa and Air France-KLM, have struggled this year to varying degrees with limited plane deliveries, engine challenges, spiralling labour costs, flattening ticket prices and moderating demand.

The airline reported an operating profit of 597 million pounds ($750.5 million) for the year ended Sept. 30, compared to 625.6 million pounds expected by analysts, according to an LSEG-compiled poll.

However, its reported operating profit is 25% higher than a year earlier. That is a "significant step towards our goal of sustainably generating over one billion pounds ($1.26 billion) annual profit before tax," said outgoing CEO Johan Lundgren in a statement.

EasyJet has dodged many of the issues that have plagued the sector thanks to its Airbus fleet equipped with CFM engines. It has also avoided the challenges surrounding U.S. plane manufacturer Boeing and engine maker Pratt and Whitney, owned by RTX.

And expectations for the coming year are optimistic, with strong demand set to continue and more interest in easyJet's lucrative packaged holiday business.

For the current fiscal year ending September 2025, the airline expects capacity of about 103 million seats and holiday customers to grow by about 25% from last year.

"The airline will continue to grow, particularly on popular longer leisure routes like North Africa and the Canaries and we plan to take 25% more customers away on package holidays," CEO-designate Kenton Jarvis, who is replacing Johan Lundgren next year, said in a statement.

(Reporting by Joanna Plucinska in London and Yadarisa Shabong in Bengaluru; Editing by Sonia Cheema and Louise Heavens)