EasyJet warns first ever annual loss could be as much as £845 million

EasyJet warns first ever annual loss could be as much as £845 million

Reuters  | Oct 08, 2020 15:31

EasyJet warns first ever annual loss could be as much as £845 million

By Sarah Young

LONDON (Reuters) - British airline easyJet (L:EZJ) warned on Thursday its first ever annual loss could be as much as 845 million pounds as the pandemic meant it was flying just 25% of planned capacity.

The airline has signalled to the government it may need more financial support, according to media reports.

The headline loss before tax forecast for the year ended Sept. 30 of 815-845 million pounds was worse than the loss of 794 million expected by analysts, Refinitiv Eikon data showed.

That is the first time easyJet, which was founded in 1995, has ever made a full-year loss.

With travel at very low levels, most European airlines are bleeding cash. EasyJet's larger low-cost rival Ryanair (I:RYA) has called this winter a "write-off".

EasyJet said ongoing travel restrictions meant it would fly just 25% of planned capacity for the rest of 2020, behind Ryanair which is aiming for 40% in October.

At such levels and with no recovery in sight, easyJet's finances will continue to remain under pressure. CEO Johan Lundgren called on Thursday for Britain to "step up with a bespoke package of measures" to help airlines.

To survive the pandemic so far, easyJet has taken a 600 million pound loan from the government, cut 4,500 jobs, raised 608 million pounds from selling aircraft and tapped shareholders for 419 million pounds. It said it might have to do more.

"EasyJet will continue to review its liquidity position on a regular basis and will continue to assess further funding opportunities, including sale and lease backs, should the need arise," the airline said in a statement.

Bernstein analyst Daniel Roeska said easyJet was managing the downturn well, but like all airlines needed a recovery to come in 2021 as "absent this, the industry will face an existential threat."

On easyJet specifically, he said: "On current liquidity, the company needs air travel to start recovering for Easter or summer 2021 at the latest; failing that, we would be wary of a further capital raise."

In the UK, airlines have called for tax breaks and other measures to help them through the crisis as well as an airport testing regime for COVID-19 to shorten Britain's 14-day quarantine rule, which now applies to most European countries.

The government said it was looking at ways to reduce the quarantine with a report due in early November.

EasyJet, whose net debt soared to 1.1 billion pounds from 326 million pounds this time last year, said it was focused on flying profitably to conserve cash and that had helped it reduce cash burn in its fourth quarter compared with the third.

Its shares were down 0.9% at 517 pence at 0722 GMT. The stock has lost 62% of its value so far in 2020.

© Reuters. Spread of the coronavirus disease (COVID-19) in Geneva

The airline will formally report annual results on Nov. 17.

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Prateek Mehta
Prateek Mehta

I think all airlines shares have signifant further correction left  ... (Read More)

Oct 08, 2020 08:15 GMT· Reply
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+

Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.

';