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EasyJet expands flight schedule as Q4 loss set to narrow

By Michele Maatouk

Date: Tuesday 04 Aug 2020

EasyJet expands flight schedule as Q4 loss set to narrow

(Sharecast News) - EasyJet said on Tuesday that it expects to report a smaller loss for the fourth quarter of the year, as it expands its flight schedule amid stronger-than-expected summer bookings, after taking a hit from the Covid-19 pandemic.
The budget airline said it now expects to fly around 40% of planned capacity in the fourth quarter, up from the 30% previously anticipated, and that it will record a smaller loss than in Q3.

However, financial guidance for the rest of 2020 remained withdrawn "given the continued level of short-term uncertainty".

EasyJet said total group revenue for the quarter ending 30 June slid to £7m from £1.8bn in the same period a year ago, after its fleet was fully grounded at the end of March due to the pandemic. The company made a headline loss before tax of £324.5m versus a profit of £174.2m a year ago and passenger numbers slumped 99.6%.

Total headline costs fell 79% from the third quarter of last year to £332.1m, while cash burn for Q3 came in at £774m, which was below the previously-guided £1bn.

Chief executive officer Johan Lundgren said: "I am really encouraged that we have seen higher than expected levels of demand with load factor of 84% in July with destinations like Faro and Nice remaining popular with customers.

"Our bookings for the remainder of the summer are performing better than expected and as a result we have decided to expand our schedule over the fourth quarter to fly circa 40% of capacity. This increased flying will allow us to connect even more customers to family or friends and to take the breaks they have worked hard for."

At 0920 BST, the shares were up 9.% at 557.40p.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "Sun-seekers have provided an unexpected boost to easyJet's performance in the last few weeks. Destinations like Nice have proved popular as Brits sought a getaway after so many months of travel bans. The net effect of this trend is that capacity guidance for the fourth quarter has been upgraded to around 40%, up from 30%.

"While this is better than hoped for, and the progress shouldn't be knocked, traveller numbers are still markedly below normal levels. Demand isn't expected to return to pre-pandemic trends for quite some time, and easyJet's calling on the government to do more to help the aviation industry. The difficulties mean easyJet is doing all it can to keep cash in the business, and that means a significant reduction in staff numbers is expected. With its end-market having shrunk so much, the size of the workforce must fall in line.

"Overall there are some signs of positivity at easyJet, but it would be a mistake to assume the challenges are over. The group's doing a lot of the right things to protect the long-term interests of the business, but the easyJet we'll be looking at once its self-help measures are complete is going to be a very different beast."

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