easyJet Q1 2021 Update makes for Grim Reading

UK based Low Cost Carrier (LCC), easyJet has announced heavy drops in revenue and passenger numbers in its Q1 trading update, as Covid-19 travel restrictions struck the winter holiday market. The report from easyJet follow reports of a general decline amongst LCCs in the 2020/21 period.

The Report Makes Grim reading

Total revenue for the Q1 period in 2021 amounted to £165 million, down from £1.425 billion in the same period in 2020, a decline of 88.4%. The airline released its Q1 trading update on 28 January.

Easyjet has released its Q1 trading update
Easyjet has released its Q1 trading update

Passenger numbers for the period were listed at 2.85 million, a fall of 87.1% from the 22.19 million.  Load factor was at 65.7%, compared to 91.3% over the same period last year.

The company said the results were in line with expectations. It also outlined a series of cost-cutting and liquidity measures in preparation for continued lean times. easyJet expects its Q2 capacity to be no more than 10% of that in 2019, before the pandemic.

Amongst the measures have been redundancies, pay freezes and moving pilots to seasonal contracts. The company says around 1400 staff in the UK have been made redundant, and 75% of its pilots are now seasonal employees.

easyJet also says it has access to £2.5 billion of unrestricted liquidity after a series of equity, borrowing and relief moves, including a £1.4billion loan this month that is partially guaranteed by the UK government.

Preparations for the recovery

Conditions for easyJet may get worse before they get better, with UK Home Secretary Priti Patel announcing new travel restrictions on 27 January. Only essential travel in and out of the country will be permitted, with travellers forced to provide written declarations.

Travellers returning from 33 ‘red list’ countries will also be forced to quarantine in a hotel for 10 days upon returning, although only one of these – Portugal – is an easyJet destination and no date for the mandatory hotel stay has been announced.

easyJet hope travel will pick up in Q3 as restrictions are eased
easyJet hope travel will pick up in Q3 as restrictions are eased

In case of a worst case scenario in which its entire fleet is grounded, easyJet believes outlay could be reduced to £40 million per week.

easyJet is also bullish about a swift recovery once restrictions are lifted. A company survey found 65% of easyJet customers intend to book a flight in 2021, which the company believes shows a pent-up desire to travel. Earlier this month EasyJet holidays reported seeing a 250% jump in bookings compared to last year.

Additionally, easyJet has taken several slots at Gatwick airport from Norwegian, which is reducing its network as it seeks to exit insolvency.

The airline also announced a new fare class, Standard Plus, which includes an up front seat and speedy boarding.

easyJet shares rose on the release of the Q1 report, finishing at 740p at the end of Thursday 28 January, up from 699.8p the previous day.

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