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EasyJet slumps to historic £1.3bn loss as Covid-19 hammers revenue
17th Nov 2020 07:01
(Sharecast News) - Low-cost airline easyJet on Tuesday swung to a massive £1.3bn annual loss, the first in its history, revealing the full extent of the havoc caused by the coronavirus pandemic as capacity almost halved.
The pre-tax loss compares with a £430m profit a year ago. Revenue fell 52% to £3bn. The carrier also announced the sale and leaseback of a further 10 A320 aircraft with SMBC Aviation Capital Limited generating around £280.2m to bolster its balance sheet.
Bookings soared by 50% on positive news from a trial of a potential coronavirus vaccine, chief executive Johan Lundgren revealed, proving that underlying demand for travel was strong after months of travel restrictions
"We know that down the line people want to travel. Just by the news of the vaccine, you know, last Monday bookings were up close to 50%," he told the BBC.
Based on current travel, easyJet said it expected to fly no more than 20% of planned capacity for the first quarter of the 2021 financial year.
Passenger numbers plummeted to 48.1m from 96.1m as travel restrictions and quarantine policies battered demand. The airline's fleet was grounded between March and June as governments imposed strict lockdown restrictions.
On an underlying basis, the loss was £835m, within company guidance of £815m - £845m. The firm pulled its dividend for the full year, and said it would not be providing any other financial guidance.
The airline also said it would extend its borrowing under a Covid Corporate Finance Facility, staggering repayments and relieving pressure on its balance sheet, after talks with the Bank of England and the UK Treasury.
Quarterly cash burn improved to £651m from £774m a year earlier.
Hargreaves Lansdown analyst William Ryder said the positive vaccine news had promised light at the end of the tunnel.
"EasyJet will be a different company than the one that went into this crisis. The budget airline has dramatically reduced the size of its workforce, cut costs and the balance sheet is badly scarred. Investors should remember that a severe recession is still possible, and there may still be turbulence on the journey to a recovery," he said.
The pre-tax loss compares with a £430m profit a year ago. Revenue fell 52% to £3bn. The carrier also announced the sale and leaseback of a further 10 A320 aircraft with SMBC Aviation Capital Limited generating around £280.2m to bolster its balance sheet.
Bookings soared by 50% on positive news from a trial of a potential coronavirus vaccine, chief executive Johan Lundgren revealed, proving that underlying demand for travel was strong after months of travel restrictions
"We know that down the line people want to travel. Just by the news of the vaccine, you know, last Monday bookings were up close to 50%," he told the BBC.
Based on current travel, easyJet said it expected to fly no more than 20% of planned capacity for the first quarter of the 2021 financial year.
Passenger numbers plummeted to 48.1m from 96.1m as travel restrictions and quarantine policies battered demand. The airline's fleet was grounded between March and June as governments imposed strict lockdown restrictions.
On an underlying basis, the loss was £835m, within company guidance of £815m - £845m. The firm pulled its dividend for the full year, and said it would not be providing any other financial guidance.
The airline also said it would extend its borrowing under a Covid Corporate Finance Facility, staggering repayments and relieving pressure on its balance sheet, after talks with the Bank of England and the UK Treasury.
Quarterly cash burn improved to £651m from £774m a year earlier.
Hargreaves Lansdown analyst William Ryder said the positive vaccine news had promised light at the end of the tunnel.
"EasyJet will be a different company than the one that went into this crisis. The budget airline has dramatically reduced the size of its workforce, cut costs and the balance sheet is badly scarred. Investors should remember that a severe recession is still possible, and there may still be turbulence on the journey to a recovery," he said.