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Highlights
- Airline Easyjet’s shares dropped over 2 per cent after the company stated that its FY 21 losses would be between £1,135 million and £1,175 million.
- The group is seeing a demand recovery as bookings rose by 400 per cent for winter sun locations like Egypt and Turkey due to the easing of UK travel rules
UK-based low-cost airline Easyjet PLC’s (LON:EZJ) shares dropped over 2 per cent after the company reported that it expects a loss of over £1 billion in FY 2021, despite witnessing some demand recovery.
The loss forecasts, in its latest trading update published on 12 October, come despite a jump in demand for winter sun destinations, such as Egypt, Turkey and other locations. Bookings for these destinations rose by 400 per cent, following the easing of UK’s travel restrictions recently.
The group also plans to add 100,000 seats as a response to the rise in demand for such destinations.
Easyjet PLC’s (LON: EZJ) share price performance
Easyjet’s shares were trading at GBX 632.00, down by 2.47 per cent on 12 October at 9:02 AM BST. Comparatively, the FTSE 250 index, which it is a constituent of, was trading at 22,390.72, down by 0.43 per cent.
(Image source: EODHD/Others)
The company’s market cap stood at £4,825.49 million, and its one-year return was at 22.67 per cent as of Tuesday.
Easyjet’s Q4 2021 and FY 2021 trading update details
In Q4 2021, the airline flew 58 per cent of its capacity from its pre-pandemic volumes. This was a sharp increase from Q3 2021, where it flew at 17 per cent of its pre-pandemic levels in 2019.
Easyjet also completed a £1 billion worth rights issue in this period in order to bolster its balance sheet. The capital raised from the rights issues helped the airline to reduce its debt by over 50 per cent, from £2 billion to £900 million.
The group expects its Q4 2021 revenues to be at around £1,000 million and headline costs at around £1,140 million. The airline expects its capacity to reach 70 per cent of 2019 levels in Q1 2022
EasyJet estimates its FY 2021 headline loss before tax to be between £1,135 million and £1,175 million, in line with a consensus of £1,175 million for the period. Also, it does not intend to make any dividend payouts this year due to expecting losses in its full-year results.
However, the company expects to recognise a non-headline gain of about £90 million. The company will report its FY 2021 full-year results next month, on 30 November.
Easyjet’s competition
Easyjet had recently rejected a takeover offer that was touted to be from its competitor Wizz Air (LON: WIZZ).
The company’s CEO, Johan Lundgren, said today the airline could compete against any other airline. Mr Lundgren said the group was the second-largest airline in Europe during the summer season, after it operated 17.3 million seats
He also added that the group was able to reduce its losses, unlike its competitors.
Mr Lundgren’s comments came after International Consolidated Airlines Group S.A (LON: IAG) owned airline British Airways, announced its plans to start a full-service short-haul hub in Gatwick airport. British Airways plans to offer competitive fares to its flyers at the Gatwick hub.
