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EasyJet bookings hit by Omicron variant as losses total £1bn

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EastJet bookings hit by Omicron variant as losses total £1bn
EasyJet: 'It’s too soon to say what impact Omicron may have on European travel and any further short-term restrictions that may result.' Photo: Peter Nicholls/Reuters

EasyJet (EZJ.L) said it had seen an "encouraging" start to the year and was optimistic about the recovery of travel in its full-year report on Tuesday, despite widening losses and a new COVID-19 variant.

On the new variant of the virus, the budget carrier said: "It’s too soon to say what impact Omicron may have on European travel and any further short-term restrictions that may result. However, we have prepared ourselves for periods of uncertainty such as this."

The company said that although it had already seen some softening in demand as a result of Omicron, it is "still seeing good levels of new bookings for H2 and we still expect that Q4 FY’22 will see a return to near pre pandemic levels of capacity as people take their long awaited summer holidays".

The group reported a headline loss before tax of £1.1bn ($1.5bn) for the year to end-September, at the higher end of forecasts, and said first-quarter capacity was expected to be up to around 65% of 2019 levels.

Watch: Travel curbed as COVID-19 variant sparks global worry

Meanwhile, its revenue for the new financial year, which began at the start of October, had topped 2019 levels. It also said it is adding 25 aircraft to its fleet to capitalise on pent up post-pandemic demand and adding slots at Gatwick, Porto, Lisbon and Linate.

Read more: UK business confidence robust but price hikes expected

A slew of new travel restrictions have been brought in in recent days following several reported cases of the mutated virus outside of South Africa, where it was first detected. 

Among other new restrictions, the UK reintroduced mandatory PCR tests for all arriving passengers and said they must self-isolate until receiving a negative result. Several European nations also closed their borders. Airline stocks were in trouble again this week following the news.

Five-day look at EasyJet's stock price. Chart: Yahoo Finance UK
Five-day look at EasyJet's stock price. Chart: Yahoo Finance UK

EasyJet shares plunged more than 3.5% in early trade on Tuesday following its results before heading back up to trade in the green by 8.30am. 

"As far as airlines are concerned this year has been a year which promised much but failed to deliver, with easyJet share price now negative for the year, as the early optimism of the spring has given way to a gradual decline towards levels last seen in early 2020," said Michael Hewson, chief market analyst at CMC Markets. 

Read more: UK service sector continues to grow as costs rise at record pace

Hewson noted that part of the reason for the declining stock is the downbeat comments made by Moderna (MRNA) CEO Stephane Bancel on the difficulty of modifying vaccines to fight variants. 

Bancel was downbeat on a quick turnaround on the vaccine front when it comes to modifications to deal with the Omicron variant.

Watch: Omicron cases detected in UK, Germany and Italy

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