Jim Armitage of the Evening Standard reckons the government may not heed easyJet’s call….
Chief executive Johan Lundgren’s renewed calls came as Donald Trump suggested further assistance for US airlines, triggering 4% rises in the share prices of United Continental and American Airlines overnight.
EasyJet has raised more than £2.4 billion in cash since the crisis including through debt, share issues and selling and leasing back its planes but the group, like other airlines, is facing unprecedented difficulties ahead as the pandemic rolls through Europe.
This morning’s financial results clearly show how airlines had a grim summer.
Last year, easyJet made a profit of £528m in July-September. This year, it expects to post a loss of between £295m and £325m, having only carried one-third as many customers.
That will drag it into the red for the full year for the first time ever, as CEO Johan Lundgren explained earlier.
Easyjet reports that it has cut UK staff levels “successfully”:
easyJet launched an employee consultation process on proposals to reduce staff numbers by up to 30%, including optimising our network and bases, improving productivity and promoting more efficient ways of working.
The UK consultations with management and administration staff, UK cabin crew and UK pilots have now concluded successfully. Discussions with the relevant unions and works councils were constructive and have resulted in greatly increased seasonal and flexible working patterns whilst avoiding the need for compulsory redundancies. This will make a material difference to our annual cost base and cash burn, particularly over the winter months.
The targeted UK cost savings have been achieved, plus our future UK winter crew cost base has the ability to be flexed down materially in line with demand.
Those cost savings included offering pilots six-month long “seasonal” contracts, along with part-time work, voluntary redundancies, extended unpaid leave and base transfers.
Consultation processes are underway in Germany, Portugal and Switzerland.
Staff in Germany aren’t happy about these plans, judging by these protests in Berlin last month:
EasyJet says that the UK government’s quarantine rules had a significant impact on business last month.
During the last quarter (July to September), it only flew 38% of planned capacity. It nudged over 50% in August, before the prospect of 14-day quarantining for arrivals from popular sunspots like Spain, France, and Portugal deterred customers from booking.
Flying peaked in August and then tapered significantly during September when customer demand was materially affected by changes in government travel guidance and quarantine rules.
Customers are booking at a very late stage and visibility remains limited.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
EasyJet has a message for the UK government this morning — the airline industry needs more help, fast, to see it through the worst crisis in its history
In a trading statement for the last 12 months, easyJet outlines how the Covid-19 crisis has plunged it deep into the red.
After months of disruption, the airline expects to report a pre-tax loss of between £815m to £845m for the 12 months to 30 September – its first full-year loss ever.
Passenger numbers for the full year halved to 48 million, due to travel restrictions and quarantine rules introduced to slow the pandemic.
EasyJet CEO Johan Lundgren warns shareholders that things will not return to normal for some time:
“Based on current travel restrictions we expect to fly c.25% of planned capacity for Q1 2021 but we retain the flexibility to ramp up capacity quickly when we see demand return and early booking levels for summer ‘21 are in line with previous years.
And faced with such a shortfall, Lundgren says ministers must step up:
“Aviation continues to face the most severe threat in its history and the UK Government urgently needs to step up with a bespoke package of measures to ensure airlines are able to support economic recovery when it comes.
easyJet came into this crisis in a very strong position thanks to its strong balance sheet and consistent profitability. This year will be the first time in its history that easyJet has ever made a full year loss.
More details and reaction to follow….
Also coming up today
The Bank of England’s Financial Policy Committee will release a statement on the UK’s financial stability, following its latest meeting last week. The European Central Bank will publish the minutes of its latest governing council meeting.
Both statements will, presumably, focus on the economic damage caused by Covid-19.
We also get the latest US weekly jobless figures, which are expected to show that over 800,000 Americans filed new unemployment claims last week
- 7am BST: German trade balance for August
- 9.30am BST: Bank of England’s Financial Policy Committee statement
- 12.30pm BST: European Central Bank monetary policy meeting accounts
- 1.30pm BST: US weekly jobless figures