Low-cost carrier Easyjet has said it expects its pre-tax
loss for the first half of the year to be in the range of £360 million to £380
million including the impact of fuel hedging due to its shut-down in the face
of the coronavirus.
The airline grounded its entire fleet of aircraft last month
after the EU introduced a temporary ban on non-essential travel within the bloc to stop
the spread of the coronavirus. The majority of its UK staff are on furlough
under the government’s job retention scheme, which will see them paid 80 per
cent of their wages up to a maximum of £2,500 per month between March and the
end of May.
Without the cost of over-hedging on fuel, Easyjet said it
expects pre-tax losses for the first half ending 31 March to come in at between
£185 million to £205 million, which is an improvement on its 2019 results.
The carrier has taken a number of actions to improve its
liquidity, including securing a £600 million government-backed loan. It has
also signed two term loan deals totalling around £400 million and fully drawn
down its US$500 million Revolving Credit Facility.
It recently announced that it is deferring delivery of 24
new Airbus aircraft: ten in FY20, 12 in FY21 and two in FY22. It has not
specified the length of the deferment. The company’s largest shareholder,
Easyjet founder Sir Stelios Haji-Ioannou, has been threatening legal action over
his belief that the airline should completely cancel the total Airbus order for
103 aircraft to save money.
Through all of the measures, Easyjet said it expects to have
generated additional liquidity of up to £1.95 billion, leading to a cash
balance of around £3.3 billion. It said this cash could sustain the business
through a nine-month grounding in a worst-case scenario.
Easyjet will release its final H1 results on 30 June under guidance
from the Financial Conduct Authority.
CEO Johan Lundgren said: “Our first half trading performance
was very strong prior to the impact of coronavirus, which shows the strength of
Easyjet’s business model.
“We remain focused on doing what is right for the company
for its long-term health and to ensure we are in a good position to resume
flying when the pandemic is over. While the vast majority of our people are not
able to work at this time, there is a small number working tirelessly to help
our customers and to plan for our return to the skies, whenever that might be.”