EasyJet eyes clearer skies but Omicron already impacting bookings

EasyJet is already seeing some impact on demand from the Omicron variant after it revealed annual losses of more than £1 billion.

The budget airline said it has seen signs that demand is softening in its current quarter, although it is “too soon to say” what impact the new strain of Covid-19 will have on the industry.

Tougher restrictions have come into force in the UK in an effort to control the new variant, despite uncertainty surrounding its seriousness, with many other countries moving to tighten their borders.

EasyJet told investors: “It's too soon to say what impact Omicron may have on European travel and any further short-term restrictions that may result. However, we have prepared ourselves for periods of uncertainty such as this.”

EasyJet has held off from giving full financial guidance for the year, given the 'continued level of short-term uncertainty'. Picture: Ian Georgeson

The comments came as the carrier posted statutory pre-tax losses of £1.04 billion for the year to September 30, compared with losses of £1.27bn the previous year, which was the first full-year loss in its 25-year history.

On an underlying basis, pre-tax losses widened from £835 million to £1.14bn.

Despite the current uncertainty, the group said it is still hopeful of a recovery to pre-pandemic levels of trading over its current year.

It said: “We are still seeing good levels of new bookings for the second half and we still expect that the fourth quarter of 2021/22 will see a return to near pre-pandemic levels of capacity as people take their long-awaited summer holidays.”

The group said it expects to ramp up its flights programme to around 65 per cent of pre-pandemic levels in the current quarter to the end of December, increasing this to 70 per cent in the three months to March and a return to around 2019 levels in the summer quarter.

It also stressed it has seen demand accelerate recently, with a “strong performance” for October half-term, the ski season and Christmas.

But EasyJet held off from giving full financial guidance for the year, given the “continued level of short-term uncertainty”.

Chief executive Johan Lundgren said: “We remain mindful that many uncertainties remain as we navigate the winter, but we see a unique opportunity for EasyJet to win customers and take market share from rivals in this period.”

John Moore, senior investment manager at wealth management firm Brewin Dolphin, said: “Despite the likely impact of the Omicron variant – at least in the short term – EasyJet appears to be optimistic about what lies ahead.

“Having raised equity earlier in the year, the airline is sitting on ample liquidity to see it through oncoming headwinds, while it has also used the pandemic to make a meaningful difference to its cost base and operations.”

Sophie Lund-Yates, equity analyst at financial services group Hargreaves Lansdown, noted: “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 is no getting away from the fact there’s further to climb and the coming months will be patchy at best. But a newly refreshed liquidity position and competitive advantages means there are some reasons for optimism where EasyJet’s concerned.”

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