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EasyJet chief says return to full capacity ‘marathon not sprint’

EasyJet boss Johan Lundgren says the airline will continue to take a cautious approach to getting back to full capacity as uncertainty remains over the Covid pandemic.

Speaking at the World Aviation Festival in London after releasing full-year results, Lundgren said the carrier was the only European airline that did not increase losses in its third quarter.

It flew just 19% of 2019 capacity in that three-month period as it focussed on generating a positive contribution from the routes it brought back on stream.

“We took the approach early in that this was a marathon not a sprint. We always made sure we were operating flights that were generating a profitable contribution.”

From 17% easyJet ramped up capacity to 58% in its fourth quarter and it has continued to bring back routes hitting 65% of pre-pandemic capacity in Q1 and will rise to 75% in Q2.

Lundgren said as easyJet continues to prepare to get back to full capacity, expecting a strong summer in 2022, its cautious approach to recovery has been vindicated.

“It’s been proven the right thing to do for us,” he said. “We have been focussing on our cash outflow.

“What’s the point of talking about taking market share, when actually there’s not really much of a market? You can fly as much as you want, but if you are losing money, what’s the point?”

Lundgren said financially easyJet is in a strong position with access to £44 billion of liquidity having completed a share rights issue in the summer to strengthen its balance sheet.

“It was not easy to do that, but in hindsight everyone recognises it was the right decision to take,” he said.

Lundgren said there has been a takeover bid for the airline earlier this year but that it was rejected by the board for not representing good enough value for shareholders.

“There was a bid that came in,” he said. “We have not confirmed who that was. The board looked very carefully at it.

“We took advice and it was clear the board was unanimous it did not provide value and we did not go forward with it. It was taken off the table.”

Lundgren said he does not expect to see much consolidation through M&A in the European aviation sector because state aid for airlines restricts potential transactions.

But he said easyJet was always open to opportunities like with the Air Berlin deal it completed in 2017.

As the second largest carrier in Europe, Lundgren said easyJet can grow organically and does not need to drive consolidation to grow or to take market share.

“Consolidation can happen in ways that capacity is being removed. We are seeing that with legacy carriers. We are getting slots at Gatwick which would not have been the case before.”

Lundgren said easyJet is well hedged for fuel and that early signs for the summer of 2022 are “very encouraging” with both business and leisure travel coming back.

He said booking windows have shortened. “Everyone is booking later…obviously because people are wanting to know what’s the latest in terms of restrictions.”

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