December 3, 2020

EasyJet slumps to £1.3bn loss as Covid forces it to cut flights – The Guardian

https://www.theguardian.com/business/2020/nov/17/easyjet-loss-covid-cut-flights-vaccine-bookings

EasyJet has slumped to a £1.3bn full-year loss, the first in its 25-year history, but said bookings had been boosted by positive news on Covid-19 vaccines.

Johan Lundgren, the chief executive, said bookings had surged by 50% last week after the US drugmaker Pfizer and the German biotech firm BioNTech announced that their coronavirus vaccine was more than 90% effective. “Momentum has continued this week, as people have more confidence making travel plans going forward,” he said.

On Monday, there was further good news when the US biotech company Moderna said its vaccine was 94.5% effective, raising hopes that more than 1 billion people could be immunised against coronavirus by the end of next year with the first two vaccines.

“Clearly the news about the vaccine is good news but the industry is still very much in difficulty and we are still waiting to see when the recovery can come,” Lundgren said.

“We know when the recovery comes it will be strong. The longer travel restrictions are in place, it actually increases pent-up demand.”

He said when the UK lifted the quarantine for the Canary Islands in late October sales jumped 900% over the following five days and easyJet added 180,000 seats. Short-haul and leisure travel will recover more quickly than long-haul and business trips, Lundgren said, and easyJet will be opening seasonal bases in Málaga and Faro next summer. He expressed confidence that travel would bounce back to pre-pandemic levels by 2023.

Holiday bookings for next summer are significantly ahead of those at the same point in previous years, easyJet said. It expects the package holiday market to recover more quickly than flight-only bookings, as many customers will want more certainty in the current climate.

Lundgren has written to Boris Johnson to offer the airline’s support – its fleet and up to 4,000 crew – for the rollout of vaccines. He added that testing at airports and a modified quarantine system, with self-isolation required only for travellers returning from high-risk destinations, were also crucial. The transport secretary, Grant Shapps, has said that a “test-and-release system” should be in place by 1 December.

EasyJet tumbled deep into the red with a pretax loss of £1.27bn in the year to 30 September against a profit of £430m the year before. This includes a £311m charge related to fuel and other items as a result of the sharp drop in flying and a £123m for redundancy costs. The airline flew 48.1 million passengers in the year, about half the previous year’s number, which meant revenues more than halved to £3bn.

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The airline cut its flight schedule to 20% of flights for the rest of 2020 after the introduction of new lockdown measures in the UK and mainland Europe for November. This means it will be operating 265 flights a day, on average.

Easyjet has raised £3.1bn of cash since April through measures such as the sale and leaseback of 53 aircraft, and delaying the delivery of 24 new planes. It is also cutting staff numbers by up to 30%, resulting in 4,500 redundancies.

EasyJet has closed its bases in Southend, Stansted and Newcastle, although it still uses Stansted and Newcastle for inbound flights. It has been criticised for pushing flight vouchers over cash refunds for cancelled flights, but Lundgren said the airline had paid out £863m in refunds up until 30 September.