December 3, 2020

EasyJet forecasts a loss of $1.1 billion, its first annual loss, as the pandemic continues to ravage the airline industry

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  • The British airline easyJet on Thursday said it might have lost up to $1.1 billion in its 2020 fiscal year — its first full-year loss.
  • The airline forecast headline losses before tax for the year that ended September 30 of £815 million to £845 million, or $1.06 billion to $1.1 billion). 
  • The budget carrier said it expected to operate at about 25% of operational capacity in the first few months of 2021.
  • EasyJet scrapped its dividend.
  • Visit Business Insider’s homepage for more stories.

The British airline easyJet warned on Thursday that it might have lost up to £845 million, or $1.1 billion, in its 2020 fiscal year — its first full-year loss.

The budget airline has scrapped its dividend amid the carnage caused by the coronavirus pandemic, it said in a trading update.

Based on current travel restrictions, easyJet said it expected to fly at about 25% of planned capacity for the first quarter of 2021.

The UK company forecast a headline loss before tax for the year that ended September 30 of £815 million to £845 million, or $1.06 billion to $1.1 billion, exceeding the £794 million loss expected by analysts. 

The airline’s CEO, Johan Lundgren, called for a “bespoke package of measures” to support the industry from the UK government. “Aviation continues to face the most severe threat in its history and the UK Government urgently needs to step up,” he said.

Sky News reported Thursday that easyJet had warned the government it might need more state aid. The airline has already secured a £600 million loan from the COVID Corporate Financing Facility, issued by the Bank of England and the HM Treasury.

Despite the losses, easyJet said it was “well-positioned to weather” the pandemic and stage a recovery once the government eased travel restrictions. 

“We will cover the majority of our preexisting network with reduced frequency, taking advantage of the European slot-waiver mechanism put in place for this winter to best match our capacity against the lower demand that currently exists,” easyJet said.

It said it would continue to regularly “review its liquidity position” and assess whether further funding was necessary. It has already raised £2.4 billion in cash during the pandemic.

Since countries around the world entered widespread lockdowns in March, the aviation industry has been severely affected. Numerous European countries such as the Netherlands, the UK, and Spain are seeing a resurgence in cases and instigating local lockdowns in some areas.

EasyJet, which normally operates more than 1,100 routes across more than 35 countries, said in May it would slash 4,500 jobs — roughly 30% of its workforce — because of the pandemic. The company later said it didn’t expect demand for flying to return to 2019 levels before 2023.

The results came after Manchester Airports Group, which owns airports in Manchester as well as London Stansted Airport, warned this week it could cut more than 800 jobs. Monthly demand is 75% below usual levels, it said.

EasyJet is due to report formal annual results on November 17.

Shares in easyJet were down about 2% at £514, or $666, on Thursday morning.

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