What's going on?

EasyJet warned on Thursday that it�s set to make a loss for the third year in a row.

What does this mean?

A spoonful of sugar helps the medicine go down, so let�s start with EasyJet�s good news: July to September was a busy period for the airline, with jet-setting vacationers taking over 26 million flights with the carrier. And that figure � 88% of 2019�s pre-pandemic levels � was enough for EasyJet to net a healthy profit in the quarter. Now for the medicine: that high-flying period wasn�t enough to make up for a bunch of flight cancellations and Covid restrictions that ate away at profit earlier in the year. And when you factor in the effect of the surging dollar (many of the airline�s costs are paid for in the greenback), it�s no wonder that EasyJet expects to post a pre-tax loss of as much as �190 million ($210 million) for this financial year. Now, there are some signs that strong demand will continue into this winter and next summer � but not enough to placate investors about what�s set to be EasyJet�s third straight annual loss.

Why should I care?

For markets: Vacay decay.
It looks like Europeans are still living their best lives: not one major airline in the region has reported declining bookings despite widespread economic turmoil, and EasyJet�s arch rival Ryanair actually reported that September was its third busiest month ever. That said, analysts think current strong demand could be short-lived, which might explain why Ryanair and EasyJet�s share prices have fallen by around 50% this year.

The bigger picture: Bye bye, small fry.
Analysts at Bernstein predict that Europe�s weaker airlines might not make it through this winter, as countries that rescued carriers during Covid begin to focus their financial efforts on more pressing problems. That�s good news for big fish like EasyJet and Ryanair: they can move in and hoover up customers that collapsing airlines leave behind.