EasyJet losses take UK airline hits from Covid 19 crisis to £7 billion after British Airways, Ryanair and Wizz hit

EasyJet CEO slams lack of state aid for UK airlines and says “noone knows” what the bounceback from Covid will look like
Holiday flights will bounce back fastest, says easyJet chief
easyJet
Jim Armitage @ArmitageJim17 November 2020

EASYJET today said it had plunged into a £1.3 billion loss, meaning UK-listed airlines have now racked up nearly £7 billion in coronavirus losses.

Faced by repeated on-off travel bans, quarantines and failed testing efforts, airlines have made unprecedented losses since March.

Today’s collapse into the red for its financial year from easyJet adds to British Airways and Aer Lingus owner IAG’s £5 billion nine month loss, Ryanair’s £380 million for the first half-year and Wizz Air’s £218 million, also for the half-year.

The easyJet chief executive was today cautiously optimistic that better times would come thanks to vaccines, but said it was too soon to tell when, or how marked the improvement would be.  

In the meantime, he warned the current quarter’s capacity will be cut to just a fifth of normal levels.

Johan Lundgren said: “It is fair to say we have had good news from the vaccines and we know when the recovery comes it will be strong. But noone has the visibility to say when it will happen.

“It is all due to travel restrictions and, as we have seen, they can be switched on and off so fast.”

This was far more measured than Ryanair chief Michael O’Leary’s statement last week that the bounceback would see capacity surge to 70-80% of pre-pandemic levels by the summer.

EasyJet had a surge in bookings for next year when the Pfizer vaccine news was announced last week, he said, adding that when the Canary Islands travel bans were lifted, bookings shot up 900 percent.

He said he had yesterday written to the Prime Minister to offer easyJet’s help in distributing vaccines, both through its fleet of planes and its staff.

He also repeated his disappointment that the UK has not offered any separate assistance to the airline industry, unlike other European countries. 

Lundgren said he was in negotiations with several EU states to obtain assistance such as furlough help.

“Airlines there have been offered billions and billions of euros in support. I am all for that... but how will it be used? If they are going to use it to take market share that will be a big problem.”

He said previous recessions showed when the bounceback comes, “short haul will recover quicker than long haul, leisure will recover quicker than business and people will gravitate to brands. These are the core faculties of the strength of this business.”

EasyJet has sold and leased back aircraft and raised billions of pounds through the financial markets and state loan scheme to keep itself solvent. 

Today it announced it had extended its borrowing from the UK government under the Covid Corporate Financing Facility. It will now repay £300 million in March next year and thre remaining £300 million in November.

It sold and leased back 23 aircraft during the financial, 20 since the year ended and today announced deals on a further 10 A320s with SMBC Aviation Capital to generate £280.2 million.

After the deal, easyJet will only own 55% of its fleet. It is not considering any more sales.

Its cash position is now £2.3 billion and cost cutting measures have reduced the rate at which it will burn through that during the winter months.

Its cash burn over the third quarter of £774 million  fell to £651 million during the fourth.

Total cash refunds to customers in the second half of the year were £863 million and it has outstanding travel vouchers of £250 million.

Net debt is £1.13 billion against £326 million a year ago.