Airline Weekly

EasyJet Warns of First-Ever Annual Loss — $1 Billion

U.K.-based low-cost carrier easyJet warned it’s on track to report a loss of more than $1 billion for the year, its first-ever full-year loss. In an update to investors, CEO Johan Lundgren said passenger demand for the full year will be half of what the carrier had expected.

Lundgren reiterated a call for the U.K. government to provide more aid to the industry. “Aviation continues to face the most severe threat in its history and the U.K. government urgently needs to step up with a bespoke package of measures to ensure airlines are able to support economic recovery when it comes,” he said.

The government has offered loans to airlines, but has not offered a comprehensive stimulus package, such as those in the U.S., Singapore, and Germany, among other countries. British Airways, easyJet, and Ryanair are among the airlines that have taken government-backed loans through the U.K.’s Covid Corporate Financing Facility.

EasyJet, like many European airlines, went into the summer optimistic that a recovery was underway. The carrier flew 24% of its planned capacity in July, but this rose to operating more than half of its planned flights in August. Capacity and demand dropped off in September, and the airline plans to fly only 38% of its planned capacity in the fourth quarter.

But the first quarter of next year will be even leaner. “Based on current travel restrictions we expect to fly [circa] 25% of planned capacity for Q1 2021 but we retain the flexibility to ramp up capacity quickly when we see demand return and early booking levels for summer ’21 are in line with previous years,” Lundgren said.

Demand to leisure destinations over the summer was strong, but the imposition of more travel restrictions by several European countries in response to resurgent coronavirus infections has hampered demand in the autumn, easyJet said.

The carrier is working with its unions in the U.K, Germany, Portugal, and Switzerland to reduce headcount further. EasyJet plans to reduce its workforce by 30%, and said talks with unions had been “productive.” Talks with unions in the U.K. have concluded, and are ongoing with unions in Europe. Several European countries have generous support programs for furloghed employees, the company noted. The carrier also is planning to offer more voluntary separation and reduced-work hour plans to cut labor costs.

Through cost-cutting and by raising funds through the financial markets, easyJet estimates it has enough liquidity to operate “through the winter months.” It has the option of raising more funds through aircraft sale-leaseback deals if needed, Lundgren said.

“Throughout we have taken a very prudent and conservative approach to capacity and this disciplined approach has seen us deliver a better than expected cash burn outcome in Q4 and will see us continue to focus on profitable flying over the winter season in order to minimize losses and cash burn during the first half of 2021.”

Up Next

AW Daily

Aeromexico Awaits U.S. and Mexico Agreement Over ‘Differences’ in Safety Rating Upgrade

Aeromexico is eager to add new U.S. flights and destinations and resume its close partnership with Delta Air Lines, all of which were key elements of its Chapter 11 restructuring that concluded last year. But it can do none of those things until the U.S. and Mexican governments come to an agreement over "differences" in…

AW Daily

Airline Execs Dismiss Slowdown Fears, Say It is ‘Best Recession’ Industry Ever Faced

Business is good for airlines, except where it's not. That was the word in the halls and meeting rooms of the industry's largest annual gathering, the IATA Annual General Meeting, this week. The organization has upped its airline financial outlook for the year to $22.4 billion in operating profits, a seven-fold increase from the $3.2…

AW Daily

Emirates President Says Airlines Must ‘Do Better’ to Develop Sustainable Fuels, Meet Climate Goals

Emirates President Tim Clark called for the airline industry to "do better" and put more money towards the development of sustainable aviation fuels as part of the global push to decarbonize commercial aviation. "If we rely on government, if we rely on other entities to do things, we may be waiting a long time," Clark…

AW Daily

Turkish Airlines Maintains Bullish Growth Objectives Despite Aircraft Order Delay

A delay to the plan by Turkish Airlines to acquire 600 new aircraft has not dampened its ambitious growth objectives, including an intention to add numerous new destinations around the world and spin off budget subsidiary Anadolujet. The Star Alliance carrier postponed by two months the order that will be split between Airbus and Boeing…

AW Daily

ANA Gains Traffic From U.S.-China Dispute Over Nonstop Flights

Japan's All Nippon Airways has seen a jump in passengers traveling between the U.S. and China as geopolitical tension keeps nonstop flights between the two countries at historic lows. ANA is seeing "new demand" from travelers who transit its Tokyo hubs on trips between the U.S. and China, President and CEO Shinichi Inoue said at…

Exit mobile version