Jet2holidays will operate 20 fewer aircraft in 2021, equating to a 20% reduction from its pre-Covid 2020 capacity.
Speaking exclusively to Travel Weekly on a Roadmap to Recovery webcast, chief executive Steve Heapy described the move as a “sensible contraction” and urged the rest of industry to approach next year with care.
“I think 2021 has got to be a year of caution. And it’s got to be a year of companies strengthening their balance sheets and strengthening their resilience,” he said.
“At the moment, we’ve got to be very, very careful. We’ve got to be very cautious about the decisions we make because we could be, in two weeks’ time, in lockdown again; there could be a second spike in winter; there could be countries that are off limits next year; or there could be social distancing that’s put in place on aircraft which will effectively drop our load factor to 50 or 60%.”
Heapy warned companies needed to use 2021 to become more financially robust to overcome “more bumps in the road”.
“This has highlighted that things can be very severe; have massive consequences and I think the whole industry needs to put more time and effort into making themselves more financially robust to be able to handle these storms,” he warned.
Heapy said Jet2holidays was “well-capitalised” to cope and survive not just this crisis, but further upheaval.
“We’ve got cash in the bank. We will be able to weather storms that come our way in the future,” he said. “Of course, the big question is, when do the storms happen and how severe will they be? If we have another lockdown for three or four months in the future, then obviously that will impact all companies. But we are well-placed to weather any more storms, future lockdowns, etc.”
Heapy added: “We’ve put a lot of work into strengthening the company. We already had a very robust balance sheet. We were able to take advantage of the government’s £300 million pounds CCF scheme [Covid Corporate Finance Scheme]; we did a placing to the stock market that raised money and we sold a subsidiary company.
“That has all raised cash which we’re not splurging on share buybacks, we’re not spending it on things; it’s going to go in the bank and it’s going to make sure that we’re able to weather any storms that hit us in the future.”
Speaking about the reduction in capacity and the resulting impact on staff numbers, Heapy said: “We have downsized. We’ll be operating fewer aircraft in summer 2021 than we’d anticipated for summer 2020. We’ll have close to 20 fewer aircraft, so there is a requirement unfortunately, for less people to operate that programme. But if things settle down, I would hope that one day in the future, we’ll be back in growth mode.”
Heapy said the industry collectively needed to “put more effort into making itself more robust”.
“We can’t be in a situation where three days of sunshine (in the UK) and companies are struggling. We’ve got to build long-term businesses that can handle this. I’ve been in travel for quite a long time. There’s been lots of things that have massively impacted demand over the last 20 years. Gulf War 1, Gulf War 2, Afghanistan, 911, 7/7, volcanoes, the financial crash – loads of things, and they’ve all massively impacted demand.
“It’s not a matter of if you hit a bump in the road, it’s when and how big it’s going to be.”
Asked if he felt the industry had passed the worst of the Covid-19 ‘bump’, Heapy said: “I hope so. But one thing’s for sure, there will be more bumps in the road. We just don’t know how far ahead they are and how big they’ll be. So as an industry, we’ve got to put more effort into making sure our businesses are robust and that they can stand up to shocks that come our way.”
Heapy stressed that even with the reduction in capacity outline, there would be no shortage of flights and holidays available next year.
“We’re just tightening it up a bit. There will still be millions of seats. But it’s a sensible contraction,” he said, adding that the company would not be placing any new aircraft orders in the near future.
“We’ve taken all our aircraft that were on order. We’ve got no more in the pipeline,” he said. “We’ll be standing still for a while and then when the future looks slightly more predictable, then we’ll have an eye on growth again, I’m sure.”
