EasyJet H1 losses widen amid Covid restrictions

EasyJet reported a widening of its first-half losses on Thursday, in line with expectations, as the budget airline continues to take a hit from Covid-related restrictions.

In the six months to 31 March, the headline pre-tax loss widened to £701m from £193m in the same period a year ago, coming in within the company’s guidance range of between £690m and £730m.

The losses were mainly a result of ongoing disruption to commercial flying from Covid-related restrictions across Europe. The airline said it flew just 4.1m passengers, down 89.4% on the first half of 2020.

Total revenue fell 90% to £240m, with passenger revenue down 91% to £170m. Meanwhile, the load factor - which gauges how full the planes are - declined by 26.6 percentage points to 63.7%.

EasyJet said its cash burn during the half was better than expected thanks to "a disciplined approach to capacity and cash management". Cash burn was £39m a week on average in the first quarter and £38m in the second, outperforming guidance for £40m a week.

Based on current travel restrictions, easyJet expects to fly around 15% of 2019 capacity levels in the third quarter, with an expected increase in capacity levels from June onwards.

Chief executive Johan Lundgren said: "With leisure travel taking off in the UK again earlier this week where we are the largest operator to Green list countries and with so many European governments easing restrictions to open up travel again, we are ready to significantly ramp up our flying for the summer with a view to maximising the opportunities we see in Europe.

"We have the ability to flex up quickly to operate 90% of our current fleet over the peak summer period to match demand."

At 1355 BST, the shares were down 1.7% at 966.80p.

Keith Bowman, equity analyst at Interactive Investor, said: "In all, the degree of outlook uncertainty remains high. Vaccine rollouts need to be successful at least across Europe. Concern that the crisis is not over until it’s over globally remains an overhang for the entire travel industry.

"That said, the raising of over £5.5bn since the start of the Covid crisis and a heavy focus on costs and cash burn do offer reassurance. Vaccine rollouts are gathering pace in many countries with frequent testing now largely established. For now, while risks clearly remain, light at the end of the tunnel is slowly emerging with analyst consensus opinion currently pointing towards a tentative ‘buy’."

Laura Hoy, equity analyst at Hargreaves Lansdown, said easyJet’s revenue and profit declines weren’t unexpected. "The group only operated about 15% of its normal schedule over the period and despite a massive cost-cutting initiative, you can’t make money with half-full planes," she said.

"However, there were some silver linings. Weekly cash burn was lower than planned in the second quarter, a good sign considering the group doesn’t see capacity picking up much over the next three months. Perhaps the brightest beacon, though, was confirmation that Brits are ready to travel - if the government will let them.

"The group noted that the additional capacity it brought online following the government’s easing of travel restrictions was met with strong demand. In preparation for the summer travel season, new routes are on the books and management hopes to ramp up flights in June and beyond. easyJet’s in as good a spot as possible right now as the largest operator between the UK and the current Green list countries."