LONDON, Nov 27 (Reuters) - EasyJet ( EJTTF ) 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.

EasyJet ( EJTTF ) 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 ( BA ) and engine maker Pratt and

Whitney, owned by RTX.

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 ( EJTTF ) shares were up 3.4% soon after the market opened.

2025 LOOKING UP

While it has struggled with slightly higher fuel costs and

some disruption from the Middle East, lower oil prices and a new

network focus could help easyJet reframe its strategy for next

year.

And expectations for the coming year are optimistic, with

strong demand set to continue and more interest in easyJet's

lucrative package 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.

Alex Irving, an analyst at Bernstein, said this strategy

could also "possibly be targeting a greater share of 'sun and

sand' destinations in the Eastern Mediterranean, following the

success of the holidays business that continues to go from

strength to strength."

Lower oil prices are set to help easyJet's books next year

as well, he added.

($1 = 0.7947 pounds)