easyJet fleet on standby to recoup massive losses

UK Covid restrictions have eased, and this airline is the largest operator to Green list countries. 

First Half results to 31 March

• Revenue down 90% to £240 million
• Headline loss of £701 million, up from last year’s £193 million loss
• Net debt of £2 billion, up from £467 million in H1 2020
• No dividend payment

Guidance:

• Expects to fly 15% of 2019 capacity levels in Q3, down from a previous 20%

These latest results offer few if any surprises given easyJet's (LSE:EZJ) mid-April trading update. 

A loss of £701 million is within its prior guidance range of between £690 and £730 million, with passenger numbers down by almost 90% year-over-year to 4.1 million given the ongoing pandemic. Cost reduction remains understandably high on management’s agenda, with its savings programme aiming to achieve a total of £500 million over the current full year. Liquidity of £2.9 billion at the end of March provides an ongoing ability to weather the rest of the Covid crisis, although, like all its rivals, management continues to assess funding opportunities.   

Management comment offers cautious optimism following a further easing of UK Covid restrictions. The airline’s exposure to green listed countries is favourable and it is able to quickly ramp-up flights to popular European destinations. However, an expected 15% of 2019 capacity levels over the third quarter is down from a previous 20% estimate. 

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In all, the degree of outlook uncertainty remains high. Vaccine rollouts need to be successful at least across Europe. Concern that the crisis is not over until it’s over globally remains an overhang for the entire travel industry.

That said, the raising of over £5.5 billion since the start of the Covid crisis and a heavy focus on costs and cash burn do offer reassurance. Vaccine rollouts are gathering pace in many countries with frequent testing now largely established. For now, while risks clearly remain, light at the end of the tunnel is slowly emerging with analyst consensus opinion currently pointing towards a tentative ‘buy’.