EasyJet says it expects to make a
pre-tax loss of between £815 and £845 million for the 2020 financial
year. The airline’s chief executive says this loss will be the first in its 25-year
history but that the carrier is “well positioned for
the recovery”.
In its trading update for the full year
to 30 September,
the carrier said it had carried half the number of passengers – some 48 million
– than it did the previous year but said that it had matched this with a 48 per
cent reduction in capacity.
By restructuring
capacity in the fourth quarter, the airline said it had reduced its cash burn
to an estimated £700 million, compared with £774 million in the third
quarter. In September, the airline flew 39 per cent of its previously
planned capacity, down from 52 per cent in August.
EasyJet has also been cutting its costs
by closing some bases,
selling and leasing back some its fleet and making up to 30 per cent of its
staff redundant.
The airline will take a charge of
around £120 million in the second half of 2020 relating to
restructuring. “The continuing availability of furlough schemes in
continental European markets, in addition to the more variable contracts which
were proposed by our unions in the UK, will enable us to conserve cash
over the winter months whilst thinning our schedules far more than ever before
to allow us to match capacity with customer demand,” it said.
CEO Johan Lundgren said: "easyJet
has adapted and risen to the challenges presented by the pandemic by taking
decisive actions to minimise losses, bolster liquidity and reduce cash burn
while launching a major restructuring programme, having completed
the UK consultation and commenced consultations in a number of key
countries.
"Throughout we have taken a very
prudent and conservative approach to capacity and this disciplined approach has
seen us deliver a better than expected cash burn outcome in Q4 and will see us
continue to focus on profitable flying over the winter season in order to
minimise losses and cash burn during the first half of 2021."
The
airline says it has raised more than £2.4 billion in cash since the
beginning of the Covid-19 pandemic and “is well positioned to weather the
ongoing challenging environment and capitalise on a recovery, once government
travel restrictions are eased”.
At the end of the financial year, the
airline had £1.1 billion in net debt.
The airline said that customers are
booking late and there is limited visibility of future bookings. “Our
operations, financial and commercial teams have been working on dynamic
schedule updates, with a two- to four-week lead time, in order to capitalise on
all available demand.”
It expects to offer around 25 per cent of planned capacity for the first quarter
of 2021.