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Carrier says summer sales holding up despite concern at new travel restrictions
EasyJet said near-term bookings had weakened since the new Omicron variant was identified amid concerns over travel restrictions, but it still expects passenger numbers to return to close to pre-pandemic levels by the end of the summer.
The airline reported a loss before tax of £1.1bn for the year to 30 September, wider than the £835m loss made in 2020 but better than analysts had expected. Revenues fell 52% to £1.5bn, which was partially offset by a 33% decline in costs to £2.6bn.
Johan Lundgren, the chief executive, said while “many uncertainties remain as we navigate the winter” and the airline expected a “tough winter” outside the holiday period, adding it was too soon to say what impact Omicron may have on European travel and any short-term restrictions that may result. However, easyJet is expecting a “huge turnaround” next year, sooner than many predicted, he said.
“We’re seeing very strong demand into next summer,” Lundgren said, “because there is very strong pent-up demand. We have more revenue for next summer than we had at this point in time for the summer of 2019.”
He said short-term bookings had weakened and some people were rebooking for next year, rather than cancelling their flights, with city destinations worst affected. Sunny places such as Greece, Turkey and Egypt are popular destinations next summer.
EasyJet said demand was also strong during key periods such as the October half-term and for ski and Christmas holidays. It has been increasing the number of flights and added slots at London’s Gatwick, Porto, Lisbon and Milan’s Linate airport, with plans to get up to 70% of its pre-pandemic capacity in its second quarter compared with 65% in the current quarter, and to near-2019 levels over the summer.
Lundgren said the UK’s decision to put several countries in southern Africa on the red list of the toughest travel restrictions was an important measure. Yet he questioned the costly “blanket PCR testing” for travellers entering the UK, which “once again makes the UK government an outlier” in Europe. The government had only recently changed the requirement to lateral flow tests on day 2, in time for half-term breaks in late October.
He said easyJet had already booked more passengers for holiday packages next summer than for the whole of 2019, and expects to sell more than 1m holidays over the year.
The threat posed by the “highly mutated” Omicron variant shows what a “perilous and precarious” situation the world is in, the head of the World Health Organization said on Monday.
Stock markets were down on Tuesday after the chief executive of the US biotech firm Moderna, Stéphane Bancel, said in an interview with the Financial Times that it would take several months before an Omicron-specific vaccine could be produced at scale.
Lundgren noted that other vaccine makers had said it would take about three months, referring to Pfizer and BioNTech. “It’s not like that the current vaccines won’t give any protection at all, it’s just to what extent they give protection versus the previous variants we’ve had.”
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Airlines can’t seem to catch a break. News of new Covid variants, and the potential for further travel restrictions, makes it incredibly difficult to predict trading patterns from here. There are some competitive advantages where easyJet’s concerned. The biggest is that it’s a lower-cost short-haul carrier, where demand should return at a faster rate than long haul.
“There is no getting away from the fact there’s further to climb and the coming months will be patchy at best. But a newly refreshed liquidity position and competitive advantages means there are some reasons for optimism where easyJet’s concerned.”
Shares in easyJet were down 0.8% in morning trades on Tuesday.