EasyJet will fly just 10% of equivalent 2019 capacity in the three months to March this year to contain losses and cash burn in the face of Covid-19 travel curbs.

However, the UK budget carrier forecast the release of pent-up demand across Europe once travel restrictions are relaxed as vaccines are rolled out.

A record number of more than 70 aircraft are to be deployed at Gatwick the summer as rivals retrench.

EasyJet holidays bookings for this summer are currently “significantly ahead” of last year, “although it is evident that many customers are looking for further certainty around quarantine rules prior to booking”.

The projections came as the UK budget carrier revealed a 87% fall in passengers to 2.9 million in the quarter to December 31 as capacity was slashed by 82% to 4.4 million seats – 18% of pre-pandemic levels.

Total group revenue for the three months was down 88% to £165 million.

Passenger revenue fell by 90% year-on-year to £118 million and ancillary revenue decreased by 84% to £47 million.

The airline has shed around 1,400 UK jobs as part of cost cutting, secured a new £1.4 billion loan and generated £779 million through aircraft sale and leaseback deals. The majority of UK-based pilots now have seasonal contracts.

“Furlough arrangements are in place to ensure we maximise the use of this scheme,” EasyJet added.

The airline revealed the results of research this month among 5,000 European consumers showing that 65% have or plan to make a travel booking in 2021.

Existing EasyJet customers are even more likely to travel, rising to almost three quarters planning a trip this year.

The airline said: “Subject to continued progress on vaccinations, together with the future relaxation of government travel restrictions across Europe, we are anticipating a release of pent-up demand for travel.

“We retain the flexibility to rapidly ramp up to capture that demand.’

EasyJet claimed to be “uniquely placed “to take advantage of the material reduction in competitor capacity at its key bases.

“We continue to invest in the right opportunities – we are growing at Gatwick and will have a record 71 aircraft based there this summer and our initiatives in ancillaries and easyJet holidays are expected to generate material opportunities for future profit growth.”

The carrier described its last quarter financial performance as being in line with management expectations despite increased uncertainty due to strengthened travel restrictions across Europe.

“These restrictions and the continued uncertainty regarding their future removal are the main driver of decreased customer demand, EasyJet added.

“Despite this we have successfully maintained our disciplined focus and agile approach on matching capacity to available demand while maintaining high customer satisfaction.”

Four additional aircraft will be based at Gatwick for summer 2021, having recently obtained further slots in a trade with Norwegian Air.

“These aircraft will serve new routes including Aberdeen, Bilbao and Cagliari for next summer, as well as more frequent flying on existing domestic and international routes,” easyJet said.

“EasyJet now expects to offer 107 destinations from London Gatwick across 28 countries from summer 2021 and base 71 aircraft there.”

The airline added: “The European slot waiver mechanism in place for this winter enables us to best match our capacity against the lower demand that currently exists.

“Discussions are underway by both the European Commission and the UK regarding a revised airport slot waiver for the summer 2021 season.

“We remain focused on cash generative flying in order to minimise losses and cash burn. 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.  Customers are booking at a later stage and visibility remains limited.”

Tour operating arm easyJet holidays signed a further 35 “high quality” hotels previously under exclusive contracts with competitors in the quarter to December.

“Four- and five-star hotels now account for c70% of all holidays sold and these hotels generate a margin premium,” the company said.

“Our low cost base ensures that we are able to offer outstanding value, with c75% of our holidays offering the best value in the market on like-for-like searches, whilst still providing strong marginal profit contribution.

“Holidays for winter 2021-22 were launched in December and are experiencing very positive demand.

“We are continuing to build on our unique position within the holidays sector, offering package holidays at great prices through to the end of March 2022 and providing confidence to book through our industry leading ‘protection promise’.

“Our purpose-built, highly scalable business model ensures low fixed costs and strong marginal profit contribution.

“We continue to enjoy strong partnerships with leading hotels without the need for financial commitments or inventory risk.”

Chief executive Johan Lundgren said: “Our performance in the period was in line with management expectations, despite more stringent restrictions coming into place.

“We have taken the right actions to emerge leaner with a reduced cost base and the retrenchment of legacy carriers at key airports will provide additional opportunities for easyJet.

“Our core strengths remain unaffected by the pandemic – we have loyal customers who know and trust our brand, an unmatched network, offer value for money and a leading position on sustainability with high customer satisfaction.

“The key to unlocking travel is going to be the vaccination programmes combined with governments progressively removing restrictions when it is safe to.

“And in the meantime, our flexible industry-leading policies mean that customers can make plans and book with confidence.”

Jack Winchester, analyst at City research firm Third Bridge, said: “2020 was an incredibly damaging year for the aviation industry, and European short-haul airlines like EasyJet have been at the eye of the storm.

“Despite these challenges, investors continue to show a willingness to plug the gaps for airlines and EasyJet has been a beneficiary of this, raising over £3 billion since lockdowns began.

“EasyJet’s revenues for the last quarter of 2020 disappointed against expectations, bringing in just £165 million in the quarter, an 88% reduction.

“However, the issues for EasyJet go well beyond cash management. The short-haul flier is having to face up to some very aggressive competitors such as Wizz Air and Ryanair.

“While EasyJet cut capacity in the last quarter by over 80%, Wizz and Ryanair have consistently been more aggressive in putting capacity back online, thanks to their lower cost bases.

“With Wizz Air clearly ambitious to grow market share, we may see EasyJet caught on a dangerous middle ground between more aggressive low-cost players and legacy carriers.”