EasyJet says recovery under way as it forecasts second £1bn annual loss

Airline says it will fly 70% of pre-pandemic capacity in final quarter of the year

 Luton-based EasyJet  has rejected a takeover approach from Hungarian rival Wizz Air.  Photograph: David Parry/PA Wire

Luton-based EasyJet has rejected a takeover approach from Hungarian rival Wizz Air. Photograph: David Parry/PA Wire

 

EasyJet declared the recovery in aviation “is under way” as it forecast its second £1 billion annual loss in a row. The low-cost airline on Tuesday said there had been strong demand for flying since the UK relaxed strict travel rules last month.

The recovery is a big relief for the carrier after it predicted a loss of between £1.135 billion and £1.175 billion for its financial year ending in September, its second on record after losing more than £1 billion in 2020.

EasyJet plans to fly 70 per cent of its 2019 levels in the final quarter of the year, up from the 60 per cent it had previously forecast, as demand for winter sun destinations helped it add 100,000 seats to its schedules.

“We are encouraged to see positive booking momentum into full-year 2022 which has led us to increase our capacity plans,” EasyJet chief executive Johan Lundgren said on Tuesday.

“It is clear the recovery is under way,” he said, pointing to signs of the return of business travel and overall bookings for the next six months that have been running at double the level of last year.

“We have seen city breaks beginning to return alongside growing demand for leisure travel from customers looking for flights and holidays to popular winter sun destinations,” Mr Lundgren said.

Alex Irving, an aviation analyst at Bernstein, said the increased capacity forecast “bodes well for the winter season”.

Takeover rejected

The Luton-based airline has rejected a takeover approach from Hungarian rival Wizz Air, the first sign of potential consolidation in an industry that has been rocked by the pandemic and travel restrictions.

Last month EasyJet launched a £1.2 billion rights issue to strengthen its finances, which was larger than some shareholders and analysts had expected.

Mr Lundgren said this will allow the airline to take advantage of “strategic investment and growth opportunities” during the recovery. Most of EasyJet’s business is focused on the UK market, where restrictions have been tighter than in continental Europe for much of the year.

The airline flew 17.3 million seats between July and September, 58 per cent of normal levels, a period when bookings from EU countries were stronger than from the UK.

UK international travel ran at just 32 per cent of normal levels over the summer, while continental European and domestic UK trips were at a far healthier 77 per cent.

The rights issue has allowed EasyJet to significantly strengthen its balance sheet, and at the end of September the airline had unrestricted access to £4.4 billion of liquidity and £900 million in net debt. – Copyright The Financial Times Limited 2021