EasyJet plunged to a historic £1.3 billion loss in the year to September as Covid forced an 11-week spring and summer grounding of its fleet during the full national lockdown.
Total revenue fell by almost 53% from £6.4 billion to £3 billion as capacity was slashed to 55.1 million seats from 105 million the previous year when a profit of £430 million was achieved. Passenger numbers halved to 48.1 million from 96.1 million.
Cash refunds paid to customers in the second half of the financial year totalled £863 million.
“During the pandemic easyJet has sought to offer its customers increased flexibility and options including refunds and vouchers or the ability to move flights without fees,” the airline added.
“The amount of flight vouchers currently in issuance is approximately £250 million.”
The budget airline, which cut its workforce by 30%, expects the package holiday market to recover more quickly than flight-only bookings.
The carrier’s EasyJet holidays arm believes “many customers will seek a package deal that provides them with more certainty in the current environment”.
Its summer 2021 booking position is “significantly ahead” of previous years at this point.
“Many of our competitors are under pressure, with traditional tour operators struggling due to their large fixed cost base and financial obligations,” the company said.
“Many Online Travel Agents (OTAs) have struggled to cope with the customer service levels required during Covid-19 and a number of smaller travel companies have failed.”
The airline raised more than £3.1 billion since the start of the pandemic, including £600 million in government Covid aid.
EasyJet announced plans to extend its borrowing under the Covid Corporate Financing Facility (CCFF) following discussions with the Bank of England and the Treasury. This will lead to a “staggered repayment profile” with £300 million repaid in March 2021 and £300 million in November 2021.
“This is part of a wider financing strategy to refinance all upcoming maturities in a structured manner,” the carrier added.
EasyJet plans to operate just 20% of planned capacity in the current quarter, as previously reported.
“The European slot waiver mechanism in place for this winter will enable easyJet to best match our capacity against the lower demand that currently exists,” the carrier added.
“We remain focused on cash generative flying over the winter season in order to minimise losses during the first half. We retain the flexibility to ramp up capacity quickly when we see demand return.
“At this stage, given the continued level of short-term uncertainty, it would not be appropriate to provide any further financial guidance for the 2021 financial year.”
Chief executive Johan Lundgren said: “I am immensely proud of the performance of the easyJet team in facing the challenges of 2020. We responded robustly and decisively, minimising losses, reducing cash burn and launching the largest cost out and restructuring programme in our history – all while raising more than £3.1 billion in liquidity to date.
“EasyJet has not only withstood the impact of the pandemic, but now has an unparalleled foundation upon which to emerge strongly from the crisis. Our unmatched short haul network and trusted brand will see customers choose easyJet when returning to the skies.
“While we expect to fly no more than 20% of planned capacity for Q1 2021, maintaining our disciplined approach to cash generative flying over the winter, we retain the flexibility to rapidly ramp up when demand returns.
“We know our customers want to fly with us and underlying demand is strong, as evidenced by the 900% increase in sales in the days following the lifting of quarantine for the Canary Islands in October. We responded with agility adding 180,000 seats within 24 hours to harness the demand.
“And last week we saw the welcome news about a possible imminent vaccine roll out.
“I would like to thank everyone at easyJet for their work which has left us well positioned and expecting to bounce back strongly.”
Dan Thomas, senior analyst at global primary research firm Third Bridge, said: “Potential vaccines don’t change the near term demand picture for carriers like easyJet.
“For the time being, this winter looks bleak for easyJet as national lockdowns persist across the continent. This is reflected in carriers’ capacity planning, with easyJet intending to fly around only 20% of planned capacity for fiscal Q1 2021.
“EasyJet continues to use the sale and leaseback of unencumbered aircraft as a source of liquidity. The carrier announced the sale of eleven A320s last week with cash proceeds of £131 million. The low-cost airline now retains 141 fully owned and unencumbered aircraft, roughly 40% of its fleet.
“EasyJet has been issuing travel vouchers rather than refunds to limit the cash impact of cancelled flights, what effect this has on customer sentiment is yet to be seen.
“When travel corridors do begin to reopen, profitability is likely to remain depressed as multiple carriers look to redeploy across a smaller number of potential routes and discount fares are offered.”