EasyJet halves losses in fourth quarter despite Omicron threat

Airline posted pre-tax loss of £213m for final three months of December

EasyJet chief Johan Lundgren said bookings jumped in Britain earlier this month when travel restrictions were reduced. AFP

British airline easyJet halved its losses in the fourth quarter of last year and expects demand to be strong this summer when its capacity will approach pre-coronavirus levels.

The England-based company posted a pre-tax loss of £213 million ($287.6m) in the three months to the end of December, significantly lower than the £423m loss in the same period in 2020.

Chief executive Johan Lundgren said bookings jumped in Britain earlier this month when travel restrictions were reduced, with another boost tied to the government’s announcement that testing requirements would end next month.

"We see a strong summer ahead, with pent up demand that will see easyJet returning to near 2019 levels of capacity, with UK beach and leisure routes performing particularly well," Mr Lundgren said.

Britain will end testing from February 11 and the EU has said it also plans to drop requirements for those who are fully vaccinated.

The changes have raised confidence levels among airlines after a two-year slump caused by the Covid-19 pandemic, which grounded planes around the globe when the crisis began in March 2020.

The International Air Transport Association said earlier this week that the global airline industry is “optimistic” about the outlook for air travel in the year ahead as Omicron-related restrictions are eased or removed.

“We believe testing for travel across our network should soon become a thing of the past,” said Mr Lundgren.

This came after annual passenger traffic recovered to 42 per cent of 2019 levels last year and cargo volumes rose 7 per cent from 2019, with domestic travel leading the recovery.

The contraction in easyJet’s losses in the fourth quarter came despite the Omicron variant of coronavirus affecting its performance, with the flying at 67 per cent capacity in December, causing it to miss its forecast of 80 per cent.

The airline's share price dropped 1.3 per cent in early trading after it said the Omicron variant was also affecting its performance this quarter. However it pared back some of its losses by 9am to be down 0.6 per cent.

EasyJet faces increased competition from bigger rival Ryanair Holdings and fast-expanding Wizz Air Holdings, which are both rapidly adding planes.

Wizz said on Wednesday that its Omicron losses are expected to continue in the first quarter of this year while pledging to boost UK capacity in the near term, especially at Gatwick airport south of London, easyJet’s biggest base.

Both Ryanair and Wizz are also growing in hot markets such as Italy, where Alitalia successor ITA Airways is a re-energised contender.

Updated: January 27, 2022, 9:17 AM