EasyJet has warned it faces losses of more than £800m this year and that it expects to fly at just 25% of normal capacity into next year, the annual loss will be the first in EasyJet’s 25-year history. Although the airline said in a trading update it had taken tough action to cut costs, the warning underlines the continuing challenges for the industry, however, chief executive Johan Lundgren said, aviation continues to face the most severe threat in its history and the UK government urgently needs to step up with a bespoke package of measures to ensure airlines are able to support economic recovery when it comes.
Easyjet is putting a brave face on it, but these figures illustrate just how tough life in the aviation industry is right now, hopes of a rapid recovery after the lockdown were dashed when the government introduced quarantine restrictions on arrivals from abroad. Over the summer peak , the airline was still able to operate at 38% capacity but its expectations for the final three months of the year are clearly very limited, Easyjet has shored up its finances by taking on loans, selling and leasing back part of its fleet and doing cost-cutting deals with its staff, but it’s still burning through cash, and while it says bookings for next summer are strong, the future remains deeply uncertain, like pretty much every other carrier right now, it’s navigating through some very stormy skies. The airline said it expected to sink into a pre-tax loss of between £815m and £845m in the current financial year, this is worse than analysts’ forecasts of a £794m loss.
The carrier has already taken a £600m loan from the government, cut 4,500 jobs, raised £608m from selling aircraft and tapped shareholders for £419m, EasyJet’s statement said it would continue to review its liquidity position on a regular basis and will continue to assess further funding opportunities, including sale and lease backs, should the need arise. It is understood that no formal request has been made, but an EasyJet source said the airline would keep all its funding options open as it enters what could be a difficult winter trading period.
With air travel at very low levels because of the coronavirus pandemic, most European airlines are losing money, and EasyJet’s larger rival Ryanair has called this winter a “write-off”.