EasyJet reports its first annual loss of £1.27 billion, braces for long winter season
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The airline’s revenues more than halved for the year, owing to the coronavirus pandemic, which has largely brought the global aviation sector to a screeching halt.
For the full year, the airline reported a 50% decrease in passenger numbers — a total of 48.1 million passengers for 2020, compared to 96.1 million passengers in 2019. Additionally, capacity for the year decreased by 47.5%
The airline added in its full-year report (PDF) that it expects to fly no more than 20% of its planned capacity for the winter and into 2021. However, Johan Lundgren, the airline’s CEO, said that the carrier expects to retain the flexibility to “rapidly ramp up” service when demand returns.
“We know our customers want to fly with us and underlying demand is strong, as evidenced by the 900% increase in sales in the days following the lifting of quarantine for the Canary Islands in October,” Lundgren said. “We responded with agility adding 180,000 seats within 24 hours to harness the demand.”
During the fourth quarter, EasyJet flew just 34% of its planned capacity, which was largely dictated by England’s travel corridor approach to air travel. As destinations were added to or removed from the travel corridor list, EasyJet changed its operations.
During the winter period, the airline expects to remain focused on cash-generating in order to minimise losses during the first half of 2021.
To offset some of the losses with the reduction in passenger numbers, EasyJet turned to other sources to generate money. In total for the year, it gained £38 million as a result of the sale and leaseback of 33 aircraft. That, compared to a total of £2 million for the prior year.
Though airlines, including EasyJet, were largely able to capitalise on the summer travel season, the shoulder seasons in spring and early autumn remained largely on hold. During the first lockdown in March, EasyJet grounded its entire fleet and suspended its operations for a period. While summer demand bounced back, by September, more restrictions and lockdowns hindered the airline’s operations.
Going forward, the airline will look towards a reduced operation. As part of its restructuring programme where it reduced staff numbers by up to 30%, the airline closed its bases in London Southend, London Stansted and Newcastle, though it will still fly to Stansted and Newcastle on an inbound flying basis.
With the return of business travel around Europe all but certain, the airline is also looking to strategically open bases in order to capitalise on leisure demand. EasyJet has announced that it intends to open seasonal crew bases in Malaga and Faro during the summer 2021 season.
While the airline isn’t giving any financial guidance for the 2021 financial year, given the uncertainty, there are promising signs. In the past week, two vaccines have shown up to 95% effectiveness. Additionally, the government has signalled that it will soon revise its guidance on travel.
Since unveiling the Global Travel Taskforce, Transport Secretary Grant Shapps said the government is close to announcing a quarantine and test approach to travel. Rather than requiring all travellers quarantine for 14 days if they’re coming from a non-travel corridor destination, the new approach will allow travellers to test out of a full quarantine. While travellers will still have to quarantine for a period, it will be reduced if they’re able to show a negative test.
The development of a vaccine is “certainly is good news, because we know that is going to be a very critical part of the recovery,” Lundgren said on BBC Radio 4. “We know that people want to travel. On the news of the vaccine last Monday, bookings were up close to 50%, so it just gives evidence to the fact that any good news that comes out of here makes people more confident making bookings going forward.”
On Tuesday, the airline also announced that it had agreed to an extension in the repayment of a £600 million loan from the U.K. government. The extension will help the airline to manage its finances for the winter season.
Featured photo by FABRICE COFFRINI/AFP via Getty Images.
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