EasyJet 'ready to significantly ramp up flying for the summer' despite mounting losses: reaction
EasyJet has revealed hefty half-year losses and expects to fly only around 15 per cent of its pre-pandemic flight programme until the end of next month despite a reopening of some overseas travel.
The budget airline reported underlying losses of £701 million for the six months to the end of March, compared with £193m a year earlier.
While capacity will still be only around 15 per cent of 2019 levels in its third quarter, the low-cost carrier expects to ramp up its programme from June onwards to meet “pent-up demand”.
The Luton-based airline, which runs a string of key domestic and international routes out of Scotland, has added more than 105,000 seats on flights when government ministers announced the so-called green list countries – from which UK travellers will not need to quarantine on return.
Chief executive Johan Lundgren said: “We are ready to significantly ramp up our flying for the summer with a view to maximising the opportunities we see in Europe.
“We have the ability to flex up quickly to operate 90 per cent of our current fleet over the peak summer period to match demand.”
“We know there is pent-up demand, we saw this again when green list countries were released and added more than 105,000 seats, and so we look forward to being able to help many more people to travel this summer,” he added.
The group saw revenues plummet 90 per cent to £240m in its first half as the ban on international leisure air travel from Britain saw passenger numbers tumble 89.4 per cent.
Laura Hoy, equity analyst at financial services group Hargreaves Lansdown, said: “EasyJet’s revenue and profit declines weren’t unexpected – the group only operated about 15 per cent of its normal schedule over the period and despite a massive cost-cutting initiative, you can’t make money with half-full planes.
“However, there were some silver linings. Weekly cash burn was lower than planned in the second quarter, a good sign considering the group doesn’t see capacity picking up much over the next three months. Perhaps the brightest beacon, though, was confirmation that Brits are ready to travel – if the government will let them.”
On a reported basis, half-year pre-tax losses stood at £645m against losses of £353m a year earlier. But the group limited losses by slashing costs under a programme to save around £500m over the full year in response to the devastating impact of the pandemic on the travel sector.
Freetrade analyst David Kimberley noted: “It’s easy to think a return to normal means it’s going to be business as usual again for the likes of EasyJet.
“In one sense that’s true. Regular travel should mean the company can get back to its pre-pandemic profitability. And if European vaccine rollouts speed up, then the firm will be better-placed than some to start taking people abroad.
“But the problem for shareholders now becomes the mound of debt the firm has built up during the past 12 months.
“EasyJet has close to seven times as much debt as it did prior to the pandemic and that will undoubtedly eat into future earnings.”