Finance

EasyJet warns of ‘softening’ demand as Omicron worries consumers

EasyJet warned flights bookings had been hit by the return of Covid travel restrictions as the low-cost carrier reported its second consecutive £1bn annual loss.

The airline said on Tuesday there had been “some softening of trading” for the rest of 2021, but added the impact of had been less severe than when travel curbs were introduced earlier in the pandemic. EasyJet shares fell 2.6 per cent to their lowest level in more than a year.

The UK reintroduced expensive PCR testing for all international arrivals on Tuesday morning, and along with other European countries has restricted travel from southern Africa following the detection of the new Omicron strain of coronavirus.

It was too early to tell if the industry’s fragile recovery has been blow off course, easyJet said, but it slightly pared back its flight schedules for the rest of this year.

The airline planned to fly 65 per cent of 2019’s capacity in the current quarter — down from the 70 per cent forecast in a trading update in October.

EasyJet has been notably more cautious in its scheduling than low-cost rivals Ryanair and Wizz Air, and expected its planes to be 80 per cent full over the rest of this year.

“We remain mindful that many uncertainties remain as we navigate the winter,” chief executive Johan Lundgren said.

City breaks have been worst hit by the travel restrictions, but more people have been transferring flights into next year than cancelling them, Lundgren said.

He was upbeat over the longer-term recovery from the pandemic, and said bookings for the spring and summer were still strong, and running ahead of pre-pandemic levels.

The airline expected to return to near pre-pandemic levels of trading by the end its fourth quarter, which runs from July to September.

“This was always going to be a year of two halves, where there will be uncertainty over the winter, and we expect things to pick up strongly into the summer,” Lundgren said.

The carrier has secured new slots at airports including Gatwick, Lisbon and Porto, and planned to lease six new aircraft to meet the pent-up demand for travel next summer.

“EasyJet expects a significant benefit as the UK bounces back next summer,” Lundgren said.

The hit from the new variant came as easyJet reported a loss of £1.1bn for its financial year ending in September. It also lost more than £1bn in its previous financial year — a period that included the start of the coronavirus crisis. Total revenue fell by 52 per cent across the financial year to £1.5bn.

The UK airline turned to shareholders for a £1.2bn cash call to bolster its finances in September, and had access to £4.4bn of liquidity by the end of September.

“It is too soon to tell what impact Omicron will have on travel restrictions, but easyJet has the balance sheet strength to deal with such a challenge,” said Gerald Khoo, a transport analyst at Liberum.

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