easyJet reports $1.1 billion loss for third-quarter due to COVID-19

Europe’s largest budget airline, easyJet said it booked a net loss of about $1.1 billion for the third quarter as the Coronavirus continues to hamper its passenger traffic.

Commenting on the results, Johan Lundgren, easyJet Chief Executive said: “I am immensely proud of the performance of the easyJet team in facing the challenges of 2020. We responded robustly and decisively, minimising losses, reducing cash burn and launching the largest Cost Out and restructuring programme in our history – all while raising more than £3.1 billion in liquidity to date.

“easyJet has not only withstood the impact of the pandemic, but now has an unparalleled foundation upon which to emerge strongly from the crisis. Our unmatched short haul network and trusted brand will see customers choose easyJet when returning to the skies.

“While we expect to fly no more than 20% of planned capacity for Q1 2021, maintaining our disciplined approach to cash generative flying over the winter, we retain the flexibility to rapidly ramp up 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.  We responded with agility adding 180,000 seats within 24 hours to harness the demand. 

“And last week we saw the welcome news about a possible imminent vaccine roll out. 

“I would like to thank everyone at easyJet for their work which has left us well positioned and expecting to bounce back strongly.”

Summary

·     In the year ending 30 September 2020, through its disciplined and prudent approach, easyJet has:

o  Focused on cash generative flying

o  Successfully cut operating costs and capex in order to reduce cash burn

o  Raised over £2.4 billion in liquidity

o  Retained strong customer satisfaction scores 

·     Due to the impact of COVID-19, passenger numbers for the year ending 30 September 2020 decreased by 50.0% to 48.1 million (2019:  96.1 million)

·     Capacity1 decreased by 47.5%

·     Load factor only decreased by 4.3 percentage points to 87.2% due to a prudent approach to capacity

·     Total revenue decreased by 52.9% to £3,009 million (2019: £6,385 million). Total Airline revenue per seat2 decreased by 10.6% to £54.35 (2019: £60.81). Airline revenue per seat at constant currency3 for the year ending 30 September 2020 decreased by 10.3%, reflecting growth of 10.2% in H1 and contraction of 27.5% in H2 

·     Headline Airline cost per seat excluding fuel at constant currency3 increased by 30.2% to £56.33, mainly due to the volume impact of the H2 capacity decrease. Headline Airline cost per seat increased by 21.7% to £69.03 (2019: £56.74)

·     Largest cost-out programme launched in easyJet’s history

·     100% of CO2 from fuel and operations were fully offset, as easyJet remains the only major airline to operate fully carbon neutral flying on all flights

·     Non-headline costs of £438 million (2019: £3 million positive).  Total Airline cost per seat, including the impact of non-headline items was £77.01 (2019: £56.71)

·     Headline loss before tax of £835 million (2019: £427 million profit), within the guidance range of £815 to £845 million 

·     Reported loss before tax of £1,273 million (2019: £430 million profit)

·     Headline ROCE for the year decreased to (19.9)% (2019: 11.4%)

·     Robust balance sheet strength, with total liquidity raised during COVID-19 of £3.1 billion, a net debt position of £1.1 billion (2019: net debt of £326 million) and investment grade credit ratings 

·     The board will not be recommending the payment of a dividend, in light of the loss for the year (2019: 43.9p per share dividend paid)

 

Outlook

·    Based on current travel restrictions in the markets in which we operate, easyJet expects to fly no more than c.20% of planned capacity for Q1 financial year 2021

·    We remain focused on cash generative flying over the winter season in order to minimise losses during the first half.  We retain the flexibility to rapidly ramp up capacity when we see demand return

·    Capital expenditure for the financial year to 30 September 2021 is expected to be around £600 million

·    easyJet has been operating since March 2019 such that it is ready for all possible Brexit outcomes. We are structured as a pan-European airline group with three Air Operator Certificates based in Austria, Switzerland and the UK.  Around 45% of our equity capital is held by qualifying European nationals

·    At this stage, given the continued level of short-term uncertainty, it would not be appropriate to provide any further financial guidance for the 2021 financial year

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