EasyJet records first loss in 25 years as boss calls for more state support
EasyJet has fallen to an annual loss of £ 1.3 billion, the first in its 25-year history, as the industry-wide aviation crisis shows little sign of abating.
The low-cost airline said on Tuesday it expected to fly only a fifth of its normal schedule for the rest of the year, as it tries to minimize losses.
The airline’s shares fell 2% to 758.80p at lunchtime in London, recovering from a 5% drop in early morning trading.
With flight demand expected to be low even during the traditionally busy Christmas period and recovery hopes delayed until next year at the earliest, EasyJet chief executive Johan Lundgren again called for more support of the government.
Mr Lundgren, who has repeatedly called for increased government support in recent weeks, told the Financial Times he would welcome further state loans or the removal of air passenger taxes to stimulate demand .
Although he did not call for direct injections of money into UK airlines, he noted that some mainland carriers have received billions of euros in support.
“I am concerned that funds are distributed very unevenly across the network to some of these airlines. We have a constructive dialogue with the government, ”he said.
The company earlier announced an extension of the repayment of a £ 600million UK government bailout loan to manage its finances during the winter season.
The airline will repay the loan in two stages in March and November, rather than in full in March.
The loss lifts the curtain on a gloomy earnings season for Europe’s biggest airlines. A second wave of infections and new travel restrictions have dampened hopes of a quick recovery after nine months of the crisis.
British Airways owner IAG reported a loss of 5.95 billion euros in the first nine months of its fiscal year, while Ryanair suffered a loss of 197 million euros in the traditionally summer season very profitable.
Still, Mr Lundgren said two positive vaccine test results in 10 days offered the industry “welcome news” and bookings had increased by about 50% since the first announcement.
“I think there are reasons to be positive,” he said, pointing to a “pent-up demand” for flights.
EasyJet shares have risen by more than 40% since Pfizer and Moderna announced successful test results for their coronavirus vaccines, although they have still lost almost half of their value since the start of the year. ‘year.
The airline, which had previously warned it was facing its first full-year loss, reported a pre-tax loss of £ 1.27bn for the year to September, of which £ 438m sterling from one-time costs such as ineffective fuel hedges and costs associated with extensive restructuring. The airline reported a profit of £ 430million in 2019.
With carriers largely in survival mode, analysts and investors across the industry are focusing on how quickly companies are using up their available cash.
EasyJet spent £ 651million on cash in the fourth quarter, up from £ 774million in the previous three months. Passenger numbers halved to 48.1 million in the year through September and revenues fell 52% to just over £ 3 billion.
The company has built up £ 3.1bn in reserves to weather the crisis, including the Bank of England loan and the sale of part of its leased fleet.
“EasyJet has amassed a bunch of money, but it may still have to use it to get to the trip recovery point. It has not yet demonstrated how or in which traffic scenarios its liquidity resources will be sufficient to get it through the crisis, ”said Bernstein analyst Daniel Roeska.
Mr Roeska said a further capital increase was the most likely way forward if the carrier needed more cash.