EasyJet said near-term bookings had weakened since the new Omicron variant was identified amid concerns over travel restrictions, but it still expects passenger numbers to return to close to pre-pandemic levels by the end of the summer.
The airline reported a loss before tax of £1.1bn for the year to 30 September, wider than the £835m loss made in 2020 but better than analysts had expected.
Johan Lundgren, easyJet’s chief executive, said “many uncertainties remain as we navigate the winter” and the airline expected a “tough winter” outside the holiday period. However he added it was too soon to say what impact Omicron, and any additional restrictions which are introduced, may have on European travel.
“We see some people are transferring out from bookings that have been made for December into the early part of next year,” he said, noting that passengers were rebooking for 2022 rather than cancelling their flights. City destinations have been more affected by customer changes than beach destinations, which remain popular for those seeking winter sun.
“We never thought the recovery would be straightforward. We knew there was underlying demand, but that there would be some uncertainty in winter and that is where we are today,” he said.
However, easyJet is expecting a “huge turnaround” next year, according to Lundgren, and sooner than many have predicted.
“We’re seeing very strong demand into next summer,” he said, “because there is very strong pent-up demand. We have more revenue for next summer than we had at this point in time for the summer of 2019.”
Many of those who have already booked their 2022 summer holiday have chosen sunshine destinations such as Greece, Turkey and Egypt.
The airline reported strong demand during key periods such as the October half-term school break, as well as for ski and Christmas holidays. It has been increasing the number of flights and added slots at London’s Gatwick, Porto, Lisbon and Milan’s Linate airport, with plans to get up to 70% of its pre-pandemic capacity in its second quarter compared with 65% in the current quarter, and to near-2019 levels over the summer.
Lundgren said the UK’s decision to put several countries in southern Africa on the red list of the toughest travel restrictions was an important measure. Yet he questioned the costly “blanket PCR testing” for travellers entering the UK, which “once again makes the UK government an outlier” in Europe. The government had only recently changed the requirement to lateral flow tests on day 2, in time for half-term breaks in late October.
The threat posed by the “highly mutated” Omicron variant shows what a “perilous and precarious” situation the world is in, the head of the World Health Organization said on Monday.
Stock markets, and especially shares in travel and aviation companies, tumbled on Friday amid concerns about the impact of the Omicron variant. Shares also traded lower on Tuesday after the chief executive of the US biotech firm Moderna, Stéphane Bancel, said in an interview with the Financial Times that it would take several months before an Omicron-specific vaccine could be produced at scale.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Airlines can’t seem to catch a break. News of new Covid variants, and the potential for further travel restrictions, makes it incredibly difficult to predict trading patterns from here. There are some competitive advantages where easyJet’s concerned. The biggest is that it’s a lower-cost short-haul carrier, where demand should return at a faster rate than long haul.”
