EasyJet plunged £213 million into the red in the Christmas quarter and is still burning through £150 million in cash each month, putting its Covid-19 losses at £2.2 billion.
The short-haul European airline, the second largest behind Ryanair with more than 300 aircraft in its fleet, said yesterday that it was still operating at only 50 per cent of normal capacity but that an increase through Easter and the spring should bring it back near to pre-pandemic levels for the key summer holiday season.
With deep losses expected again in the January-to-March quarter, traditionally its toughest, City analysts are not expecting a summer recovery to return the airline to profit this year.
EasyJet’s losses in the three months to the end of December, the first quarter of its financial year, were half the deficit it recorded in the same period a year earlier, but even after flying much-reduced schedules to fit demand, the losses were still deep compared with more normal times. Before the pandemic, the Christmas trading quarter typically might have been expected to operate at about break-even.
The airline’s shares have suffered during the pandemic. Shares in Ryanair and Wizz Air, the ambitious budget carrier snapping at its tailfins, have been brought back up to roughly pre-pandemic levels, but easyJet’s stock more than halved and pretty much stayed there. Investors have been worried about whether it would be able to stay the course and the airline eventually undertook a £1.2 billion fundraising with its shareholders last autumn to shore up its balance sheet.
EasyJet’s shares edged up ½p, or less than 0.1 per cent, to 635¾p yesterday. That is up from the 500p level they hit as the Omicron coronavirus variant spread across Europe before Christmas, but below from the £10 level at which they were trading during a rally last spring. Before the pandemic hit Europe, the shares were above £15.
An end to travel restrictions around Europe, hopes that Omicron infections would recede and a belief in strong pent-up demand from holidaymakers led Johan Lundgren, 55, the chief executive, to strike a bullish note. “Booking volumes jumped in the UK following the welcome reduction of travel restrictions announced on January 5, which have been sustained and given a further boost from the UK government’s decision this week to remove all testing requirements,” he said.
“We believe testing for travel across our network should soon become a thing of the past. We see a strong summer ahead, with pent-up demand that will see easyJet returning to near-2019 levels of capacity, with UK beach and leisure routes performing particularly well.” EasyJet is the dominant airline at Gatwick, Britain’s second largest airport, where with British Airways, its main rival there, cutting its operations, it will account for half of all flights.
The airline’s more immediate outlook remains cautious and it is selling tickets for only 67 per cent of its normal capacity this quarter. That is not much higher than in the previous quarter, which came in at 64 per cent.
It also conceded that it had not achieved its guidance of expecting to fly its aircraft at 80 per cent full. Gerald Khoo, analyst at Liberum, the stockbroker, thinks that easyJet will eventually be a winner in the aviation recovery but is pencilling in a £25 million loss for this financial year before it returns to more normal profit levels of £490 million in 2022-23.