EasyJet cuts losses in half despite Omicron hit
EasyJet (EZJ.L) revealed on Thursday that it managed to cut its losses in half in the final quarter of last year, even though the sudden rise of the Omicron variant had a devastating impact on demand.
It posted a pre-tax loss of £213m ($285m) during the three months to December, compared to a £423m loss in the same period in 2020.
This was despite the company’s load factor, a measure of how many seats were filled, falling to 67% last month, down from over 80% in October and November.
The budget airline blamed the slump on “the impact that Omicron had on customers’ confidence and ability to travel during December”.
EasyJet said it expects Omicron to continue to have a short-term impact in the quarter to March, but hailed an increase in bookings since the UK government decided to remove all travel testing requirements for fully-vaccinated passengers.
First quarter revenue rose to £805m from £165m this time last year. It flew 11.9 million passengers in the period, up from 2.9 million last year and representing 64% of 2019 levels.
Meanwhile, total cash burn was £450m, down from £969m in the same period last year.
Shares were 1% higher on the day in London.
“Booking volumes jumped in the UK following the welcome reduction of travel restrictions announced on 5 January, which have been sustained and then given a further boost from the UK government’s decision earlier this week to remove all testing requirements,” Johan Lundgren, chief executive of EasyJet, said.
“We believe testing for travel across our network should soon become a thing of the past.
“We see a strong summer ahead, with pent up demand that will see EasyJet returning to near 2019 levels of capacity with UK beach and leisure routes performing particularly well.”
He added that the UK is “leading on bookings”, compared to the rest of Europe, for the first time since spring 2020.
The low-cost airline is also boosting capacity on flights to Greece and Turkey, while Spain also has “encouraging signs of demand for the summer”.
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Matt Britzman, equity analyst at Hargreaves Lansdown said: “A focus on short haul travel puts EasyJet in a better position than its long haul rivals when it comes to capturing returning passengers. UK beach and leisure routes look set to benefit from pent up travel demand in the aftermath of Omicron, and that shows, with capacity expected to return to re-pandemic levels by the fourth quarter."
He added: “Inflation continues to be a bug bear for most industries as costs rise and consumers lose some of their disposable cash. Some good work’s been done to help offset the rising cost element, with initiatives in place last year set to deliver £250m sustainable annual savings under normal conditions.
“There’s no denying the next few months still look challenging, but there’s a glimmer of hope on the horizon with so many more holidaymakers preparing to pack their bags.”
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