EasyJet slumps to £1.3bn loss as Covid forces it to cut flights

EasyJet has slumped to a £1.3bn full-year loss, the first in its 25-year history, but said bookings had been boosted by positive news on Covid-19 vaccines.

Johan Lundgren, the chief executive, said bookings had surged by 50% after the US drugmaker Pfizer and the German biotech firm BioNTech announced last week that their coronavirus vaccine was more than 90% effective.

On Monday, there was further good news when the US biotech Moderna said its vaccine was 94.5% effective, raising hopes that more than 1 billion people could be immunised against coronavirus by the end of next year with the first two vaccines.

“Clearly the news about the vaccine is good news but the industry is still very much in difficulty and we are still waiting to see when the recovery can come,” Lundgren told BBC Radio 4’s Today programme.

“But what we do know is that underlying demand is very strong for travel. The longer the travel restrictions are in place, the bigger the increases in pent-up demand you will see.”

He said when the UK lifted the quarantine for the Canary Islands in late October sales jumped 900% over the following six days and easyJet added 180,000 seats.

Lundgren said he had written to Boris Johnson to offer the airline’s support for the rollout of vaccines. He added that testing at airports and a modified quarantine system, with self-isolation required only for travellers returning from high-risk destinations, were also crucial. The transport secretary, Grant Shapps, has said that a “test-and-release system” should be in place by 1 December.

EasyJet reported a pretax loss of £1.27bn in the year to 30 September against a profit of £430m the year before. This includes a £311m charge related to fuel and other items as a result of the sharp drop in flying and a £123m related to redundancy costs. The airline flew 48.1 million passengers in the year, about half the previous year’s number.

The airline cut its flight schedule to 20% of flights for the rest of 2020 after the introduction of new lockdown measures in the UK and mainland Europe for November. The company has raised £3.1bn of cash since April through measures such as the sale and leaseback of 23 aircraft, and delaying the delivery of 24 new planes. It is cutting staff numbers by up to 30%, resulting in 4,500 redundancies.

The carrier also said holiday bookings for next summer were “significantly ahead” of previous years at this point. It expects the package holiday market to recover more quickly than flight-only bookings, as many customers will want more certainty in the current climate.

The airline has closed its bases in Southend, Stansted and Newcastle, although it still uses Stansted and Newcastle for inbound flights. To tap into the summer leisure demand, easyJet will be opening seasonal bases in Málaga and Faro next summer.

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