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easyJet reports a loss of £318.3 million ($436 million) in the third quarter

easyJet (UK) Airbus A321-251NX WL G-UZMC (msn 8386) LGW (Richard Vandervord). Image: 954472.

easyJet reported its pre-tax third quarter loss dropped 8.2% to £318.3 million ($436 million, 370 million euros).

The airline issued this statement:

Summary

easyJet has maintained its disciplined approach to capacity and cash management during Q3 and, as a result, total cash burn during the quarter reduced to £55 million.  Fixed costs plus capex have averaged £34 million per week, outperforming the £40 million per week guidance given at Q1.  This disciplined cost and cash management has enabled easyJet to maintain net debt broadly flat at c.£2.0 billion and a headline loss before tax of £318 million, which is in line with expectations. 

easyJet’s capacity in Q4 will be up to 60% of 2019 levels, up from 17% in Q3 2021.  In order to capitalise on the opening-up of travel in continental Europe and the easing of restrictions for the fully vaccinated in the UK, easyJet continues to pivot capacity towards popular routes where we see rising customer demand. 

easyJet will emerge from the pandemic transformed, driven by a cost program that is delivering, industry-leading network / schedule flexibility, a step change in ancillary revenue and with easyJet holidays taking market share.

Commenting on Q3 trading, Johan Lundgren, CEO of easyJet, said:

During this quarter we have successfully managed through the continued challenges of the pandemic, using our operational responsiveness to capture demand while focusing on cost control and minimising cash burn.  

“We have used our existing strengths like our network with renewed purpose – pivoting capacity to Europe where we saw the strongest demand and the very way we have approached the challenges that we faced means we have adapted and built back stronger for the future. 

“As a result, we will emerge from the pandemic with longer-term wins along-side baked in sustainable cost reductions, responding effectively and in ways our competitors don’t or can’t. 

“This is all underlined by our proven business model, low fares, unrivalled network and brand trust which will be crucial going forward. So, while we know the road to recovery from the pandemic isn’t going to be a straight line we are ready to compete using these new-found strengths with everything we have learned leaving a long-term, positive imprint on the airline, transformed ready for the post-pandemic era.” 

Revenue

Passenger numbers1 for the quarter ending 30 June 2021 increased to 3.0 million, in line with an increase in capacity2 to 4.5 million seats, representing 17% of Q3 2019 capacity levels. As a result of the Covid pandemic, easyJet’s fleet had been fully grounded for all but two weeks of the third quarter 2020, flying just 117,000 seats.

This led to total group revenue for the quarter ending 30 June 2021 increasing to £212.9 million (2020: £7.2 million), with passenger revenue increasing to £151.9 million (2020: £3.6 million) and ancillary revenue increasing to £61.0 million (2020: £3.6 million).  Ancillary revenue per passenger continues to increase as a percentage of total revenue. Phase two of the cabin bags product is on track for delivery later this year. 

Cost / Cash Burn

Group headline costs for the quarter ending 30 June 2021 were £531.2 million (2020: £354.0 million 3), driven by a low level of capacity flown and by the material savings achieved across many areas of the business from easyJet’s major cost-out program. 

easyJet maintained a disciplined approach to capacity and cash management and, as a result, total cash burn during the quarter was reduced to £55 million.  Cash burn on a fixed costs plus capex basis during the quarter was £34 million per week on average, outperforming the guidance for £40 million per week given at the Q1 trading update.  easyJet paid a further £122 million of customer refunds during the quarter and the total value of vouchers in issuance is currently c.£230 million.  easyJet has paid a cumulative total of £1.2 billion customer refunds during the pandemic. 

As previously announced, easyJet’s structural cost-out programme is on target to deliver c.£500 million of savings in FY21 of which almost half will be sustainable on an ongoing basis.  The cost-out programme will help to mitigate expected cost headwinds in ownership costs and navigation charges and improve margins.  Cost actions for FY22 are underway.  We continue to utilise furlough schemes across Europe. 

Headline loss before tax for the quarter decreased by 8.2% to £318.3 million (2020: £346.8 million 3). 

 

Capacity

During the third quarter easyJet flew 17% of Q3 2019 capacity, slightly ahead of our expectations.  Our capacity forecasting has been accurate and disciplined throughout the pandemic, which has helped deliver strong cost control. 

 

April

2021

May

2021

June

2021

Q3

2021

Passengers (000s) 1

524

870

1,591

2,985

Seats flown (000s) 2

1,003

1,278

2,214

4,495

% of 2019 capacity flown

11%

13%

23%

17%

Load factor 4

52%

68%

72%

66%

 

easyJet maintains significant operational flexibility and has kept the fleet in a flight-ready condition.  95% of easyJet crew are trained to operate flights from mid-July.  Safety is our number one priority. 

 

Network

easyJet’s market-leading European short-haul network is focused on number one and two positions at primary airports and enables us to be efficient with our network choices, with an emphasis on maximizing returns.  The scale and flexibility of our network also provide us with the opportunity to realign capacity to take advantage of these changes in the competitive landscape, including:

 

·    Switching capacity from UK-touching to EU-touching for this summer, taking advantage of the considerable flexibility afforded by our destination base strategy to serve some of the stronger traffic flows we are seeing within Europe.  On 22 June we launched 21 new routes using capacity based in Palma de Mallorca (PMI), Faro and Malaga, representing 286,000 seats.  In particular this has given us the opportunity to increase our presence in Scandinavia to serve new network points, including Stockholm Arlanda and Copenhagen.  We have also switched capacity which was planned for UK/Palma de Mallorca to operate instead on Berlin/Palma de Mallorca. 

 

·    Pivoting capacity towards popular routes showing rising customer demand in order to capitalise on the opening-up of travel in continental Europe, including adding further seats to our intra-European network, such as:

o  Increased flying from Berlin to Faro and Lisbon

o  Increased flying from Amsterdam to Tenerife, Palma de Mallorca and Malaga

 

·    Increasing flying from Paris-CDG to Corsica and from Milan-Malpensa and Milan-Linate to Olbia, Catania and Palermo in order to capitalize on strong domestic demand within our continental European markets

 

·    Topping up and launching new routes related to changes in UK Government travel restrictions such as the addition of destinations like Malta and Madeira to the Green list on 25 June when we put c.60,000 additional seats on sale and launched two new routes, Bristol/Malta and Luton/Malta. 

 

·    Increasing capacity to Amber list countries when the UK government announced on 8 July that fully vaccinated passengers would be able to fly back from these countries without quarantine. We topped up capacity on 74 UK/Amber routes, notably to Spain, Greece, Portugal, and Cyprus. 

 

·    Launching eight new routes from EU and Swiss bases to cover flying for August that was previously operating from the UK, in order to maintain our strong slot portfolio in Greece.  These new routes are operating from Geneva and Basel to Corfu and Cos, to Crete from both Paris-CDG and Amsterdam, Basel to Santorini and Naples to Rhodes. 

 

·    Further building out our UK domestic leisure portfolio, including back-filling some of the capacity left by the failure of Stobart Air on 12 June.  On 17 June we launched 12 new UK domestic routes, representing 267,000 seats and including three new network points in Belfast City, East Midlands and Leeds Bradford.  Furthermore, we topped up capacity on former Aer Lingus routes from Belfast International to Glasgow, Edinburgh, Birmingham and Manchester, representing 60,000 seats.  Routes to and from Belfast are currently amongst some of the best performing in our network.  In response to the continuing UK government travel restrictions we have focused capacity on UK domestic leisure opportunities, notably to Jersey, Bournemouth and Newquay. 

 

As a result of the current divergence in government travel policies, easyJet’s bookings for this summer are heavily skewed towards continental Europe.  Whilst our business is normally split 50:50 between the UK and Europe, at present two thirds of bookings are coming from Europe. 

 

easyJet will act quickly to selectively acquire attractive slots which may become available in primary, slot-constrained airports.  We have recently acquired slots in Milan-Linate, Amsterdam-Schiphol and Paris-Orly. 

 

Forward Bookings

Customers are currently booking much closer to departure due to market conditions with 49% of our Q4 schedule booked, which compares to 65% in 2019. Booking rates on UK-touching flights have been lower than intra-EU flying due to the uncertainty around government restrictions. easyJet expect this to improve quickly as restrictions are lifted over the coming period.

UK-touching capacity is 44% sold (compared to 69% at this point in 2019) and intra EU capacity is 53% sold (compared to 64% at this point in 2019).

We remain confident about demand for travel this summer and into autumn, due to the bookings surges experienced following selective easing of travel restrictions, such as the 400% increase in week-on-week flight bookings seen following the waiving of quarantine for fully vaccinated passengers returning from Amber list destinations.  No-shows rates have dropped to average just 4% across the network as consumer confidence to fly is increasing.  CSAT and On-Time Performance rates continue above target.  We are also encouraged by high consumer savings rates and high balances of employees’ annual leave.  We expect a relatively benign pricing environment for the coming months. 

Photo: IG/speedbirduk

Fleet

easyJet’s fleet size has been reduced by c.10% in response to the Covid-19 pandemic.  Our fleet plans allow flexibility to tailor the size of the fleet according to market conditions. In 2022 we plan to grow to 317 aircraft enabling easyJet to meet the high levels of pent-up demand expected in summer 2022 and also to take advantage of the post-pandemic opportunities to grow and strengthen our network.

Deliveries of new A320neo family aircraft will resume from this autumn.  easyJet will take delivery of eight new aircraft in FY22, seven in FY23 and 18 in FY24.  These Neo family aircraft burn 15% less fuel than the aircraft they replace, generating 15% less carbon emissions.  They also generate 50% less noise footprint on take-off. In total we have 101 Neo aircraft on order, 20 purchase options and 58 unexercised purchase rights 

We retain significant flexibility with regards to the size of our leased fleet.  There are 38 leased aircraft due to be re-delivered to lessors over the coming 15 months.  We have already committed to extend some of these aircraft on very favourable operating lease conditions that are available in the current market.  We can also retain use of further aircraft on advantageous terms as we see demand returning. 

 

Balance Sheet & Liquidity

easyJet has taken swift and decisive action successfully raising over £5.5 billion in liquidity since the beginning of the pandemic, from a diversified range of funding sources.

 

As at 30 June 2021 easyJet has unrestricted access to c.£2.9 billion of liquidity, comprising cash and cash equivalents plus the undrawn portion of the UKEF facility.  The remaining £300 million of easyJet’s borrowings from the CCFF is due in November 2021.  easyJet has no other debt maturities outstanding until the 2023 financial year. 

 

As previously indicated, easyJet will continue to review its liquidity position on a regular basis and, as part of the capital structure review, assess all further funding opportunities.

 

Sustainability

easyJet continues to lead the way in Europe as the world’s first major airline to offset all of the carbon emissions from its flights on behalf of its customers and we continue to work tirelessly to minimize carbon emissions across our operations alongside supporting the development of new technologies to reinvent aviation as quickly as possible. Offsetting is an interim solution, while zero emissions technology is developed. We are excited to see the growing momentum behind disruptive technologies such as all electric, hybrid and hydrogen.  We continue to advocate smarter aviation regulation which rewards carbon efficiency and we believe that radical action to address the impact of climate change is needed.  

 

We are also proud that easyJet holidays is now the first major tour operator to offset the carbon emissions directly associated with its holidays – the fuel from flights and transfers plus the energy from hotel stays. 

 

In July we will be launching our ‘Travel Better’ marketing campaign across social media, in all of our customer service messaging and on board our aircraft, in order to improve customer understanding of the important steps we are taking on sustainability. 

 

Outlook

Based on current travel restrictions in the markets in which we operate:

·    In Q4 easyJet expects to fly up to 60% of Q4 2019 capacity

o  Capacity plans are flexible, depending upon the status of travel restrictions

o  Intra-EU flying represent 60% of currently scheduled capacity

At this stage, given the continued level of short-term uncertainty, it would not be appropriate to provide any other financial guidance for the remainder of the 2021 financial year.  Customers are booking closer to departure and visibility remains limited. 

 

    

KEY Q3 FINANCIALS

 

Three months ended

30 June 2021

30 June 2020

Change

Fav./(adv.)

Number of flights

24,682

709

3,381%

Peak operating aircraft

158

10

1,480%

Passengers (000s) 1

2,985

117

2,445%

Seats flown (000s)

4,495

132

3,309%

Load factor (%) 4

66.4%

88.9%

(22.5) ppts

Total group revenue (£ million)

212.9

7.2

2,866%

Total group headline cost (£ million) 3

(531.2)

(354.0)

(50.1%)

Headline loss before tax (£ million) 3

(318.3)

(346.8)

8.2%

Notes:

1.  Represents the number of earned seats flown. Earned seats include seats which are flown whether or not the passenger turns up, as easyJet is a no-refund airline and once a flight has departed, a no-show customer is generally not entitled to change flights or seek a refund. Earned seats also include seats provided for promotional purposes and to staff for business travel.

2.  Capacity based on actual number of seats flown.

3.  Headline loss before tax for Q3 2020 has been restated by a further £22 million. The increase in headline costs aligns to the categorization adopted during FY 2021, whereby foreign exchange gains or losses arising from the re-translation of monetary assets and liabilities, as well as fair value movements after hedges have been marked as discontinued, have been reclassified from non-headline items to headline items.  There is nil impact of this reclassification to the total loss before tax for Q3 2020, H2 2020 or FY 2020.  At H1 2021 no reclassification was made to the H1 2020 result due to the immaterial value.

4.  Represents the number of passengers as a proportion of the number of seats available for passengers. No weighting of the load factor is carried out to recognise the effect of varying flight (or ‘sector’) lengths.  

In other news, easyJet announced it will operate 60% of its pre-pandemic flights in the fourth quarter.

Top Copyright Photo: easyJet (UK) Airbus A321-251NX WL G-UZMC (msn 8386) LGW (Richard Vandervord). Image: 954472.

easyJet aircraft slide show:

Cathay Pacific’s traffic is down 94% in March 2021

Cathay Pacific Airways Airbus A321-251NX WL D-AZAD (B-HPE) (msn 10171) XFW (Gerd Beilfuss). Image: 953389.

Cathay Pacific has released its traffic figures for March 2021 that continued to reflect the airline’s substantial capacity reductions in response to significantly reduced demand as well as travel restrictions and quarantine requirements in place in Hong Kong and other markets amid the ongoing global COVID-19 pandemic.

Cathay Pacific carried a total of 18,539 passengers last month, a decrease of 94% compared to March 2020. The month’s revenue passenger kilometers (RPKs) fell 95.7% year-on-year. Passenger load factor dropped by 28 percentage points to 21.2%, while capacity, measured in available seat kilometers (ASKs), decreased by 90%. In the first three months of 2021, the number of passengers carried dropped by 98.4% against a 91.7% decrease in capacity and a 98.2% decrease in RPKs, as compared to the same period for 2020.

The airline carried 83,329 tonnes of cargo and mail last month, a decrease of 30.1% compared to March 2020. The month’s revenue freight tonne kilometers (RFTKs) fell 32.4% year-on-year. The cargo and mail load factor increased by 8.9 percentage points to 86.4%, while capacity, measured in available freight tonne kilometers (AFTKs), was down by 39.4%. In the first three months of 2021, the tonnage fell by 29.6% against a 39.6% drop in capacity and a 26.5% decrease in RFTKs, as compared to the same period for 2020.

 

Passenger

Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam said: “Our passenger business continues to face significant challenges. With the tightened crew quarantine requirements in Hong Kong, we only managed to maintain a skeleton schedule in March, operating passenger services to just 18 destinations. That represented a capacity decline of 47% when compared with February. Average daily passenger numbers decreased even further to just 598, compared to 755 in February.

Cargo

“Our overall cargo capacity was constrained by the stringent crew quarantine requirements in Hong Kong, resulting in a 39.4% year-on-year reduction in capacity. This was despite our efforts to operate more cargo-only passenger flights as well as chartered freighter flights from our subsidiary, Air Hong Kong.

“Cargo demand was strong in March, particularly from Northeast Asia and the Americas, while demand from Hong Kong and the Chinese mainland also ramped up during the latter half of the month. Load factor improved to an all-time high of 86.4%, whilst the revenue share for our Priority LIFT product continued to increase as customers sought express solutions for their critical shipments.

“Just this week, the Government announced that it would lift the mandatory quarantine requirement for fully vaccinated Hong Kong-based aircrew on freighters and cargo-only passenger flights from today. This will have a positive impact on our cargo business while also progressively reducing our monthly operating cash burn.

“Health and safety remain our top priority; we will remain vigilant and our aircrew will continue to adhere to our stringent risk-mitigation measures. Vaccinated aircrew will add a further layer of protection and risk mitigation against the spread of COVID-19.

“Our tight overseas layover control measures, and our crew’s professionalism in adhering to them, have been very effective in safeguarding the health and wellbeing of our customers, our people and the public. As a result so far this year, there have been zero positive tests among the more than 18,500 tests that our operating Hong Kong-based aircrew have taken in the days following their arrival in Hong Kong.

Outlook

“We welcome and support the government’s plan to use ‘vaccine bubbles’ as the basis for introducing further relaxation measures, including those relating to cross-boundary travel. This provides a framework under which fully vaccinated people could benefit from shorter or no quarantine requirements when traveling, such as via an Air Travel Bubble, which we are eagerly anticipating.

“Community-wide vaccination is pivotal to the global COVID-19 recovery. We have recently launched a campaign to encourage all of our employees, including aircrew, to get vaccinated as soon as possible, and we are very pleased to see that this has already received a positive response. We are grateful to all of our people who have already received or booked their vaccination, and we will continue with our efforts. This will not only help facilitate the return of regular international air travel and preserve vital connections between Hong Kong and the rest of the world, but most importantly it will also safeguard the health and wellbeing of them and their families.

“We’ve also continued to build on the momentum in moving vaccines both to Hong Kong and across our network, and earlier this week we passed the significant milestone of having so far shipped 15 million doses of COVID-19 vaccines.”

 

AIRLINES COMBINED TRAFFIC

MAR % Change Cumulative %

Change

  2021 VS MAR 2020

 

MAR 2021 YTD

 

RPK (000)        
 – Chinese mainland 9,649 -69.5% 24,710 -96.7%
 – North East Asia 3,466 -93.0% 14,051 -99.3%
 – South East Asia 11,501 -94.8% 46,643 -97.9%
– South Asia, Middle East  & Africa -100.0% -100.0%
 – South West Pacific 2,914 -99.1% 35,277 -98.8%
 – North America 34,146 -94.2% 161,569 -96.8%
 – Europe 15,245 -96.6% 40,882 -98.9%
RPK Total (000) 76,921 -95.7% 323,132 -98.2%
Passengers carried 18,539 -94.0% 70,083 -98.4%
Cargo and mail revenue tonne km (000) 503,057 -32.4% 1,687,540 -26.5%
Cargo and mail carried (000kg) 83,329 -30.1% 274,556 -29.6%
Number of flights 961 -48.3% 3,176 -73.6%

 

AIRLINES COMBINED CAPACITY

MAR % Change Cumulative %

Change

  2021 VS MAR 2020

 

MAR 2021 YTD

 

ASK (000)        
 – Chinese mainland 36,680 -39.9% 119,834 -89.8%
 – North East Asia 29,681 -77.9% 118,040 -95.9%
 – South East Asia 55,187 -89.5% 251,296 -92.7%
– South Asia, Middle East  & Africa -100.0% -100.0%
 – South West Pacific 19,759 -96.9% 508,493 -88.0%
 – North America 185,288 -83.9% 940,682 -86.9%
 – Europe 35,480 -95.8% 247,530 -95.3%
ASK Total (000) 362,075 -90.0% 2,185,875 -91.7%
Passenger load factor 21.2% -28.0pt 14.8% -54.5pt
Available cargo/mail tonne km (000) 582,431 -39.4% 2,072,724 -39.6%
Cargo and mail load factor 86.4% 8.9pt 81.4% 14.5pt
ATK (000) 616,888 -52.7% 2,280,650 -61.7%

Top Copyright Photo: Cathay Pacific Airways Airbus A321-251NX WL D-AZAD (B-HPE) (msn 10171) XFW (Gerd Beilfuss). Image: 953389.

Cathay Pacific aircraft slide show:

easyJet launches new routes from Birmingham this summer to five European beach destinations

easyJet (UK) Airbus A321-251NX WL G-UZMD (msn 8421) PMI (Javier Rodriguez). Image: 951131.

easyJet and easyJet holidays have announced the launch of new routes and holidays from Birmingham Airport for this summer.

Starting from June 29, 2021, flights and holidays will take off from Birmingham Airport to the popular beach destinations of Majorca, Málaga and Alicante in Spain, Faro in Portugal, and Corfu in Greece.   

Birmingham to Málaga flights will operate twice weekly on Tuesdays and Saturdays from June 29 with fares available from £22.99*

Birmingham to Faro will operate three times per week on Tuesdays, Fridays and Sundays from June 29 with fares from £22.99*

Birmingham to Alicante will operate three times per week on Wednesdays, Fridays and Sundays from June 30 with fares from  £23.99*

Birmingham to Majorca will operate three times per week on Tuesdays, Thursdays and Saturdays from July 3 with fares from £22.99*

Birmingham to Corfu will operate twice weekly on Thursdays and Sundays from July 4 with fares  from £22.99*

 

Ali Gayward, easyJet’s UK Country Manager commented: 

“We are pleased to announce more connectivity to Birmingham today in flying to popular beach destinations and getting customers away on their much-needed summer holiday across Europe this year.

“We believe that a framework can be put in place for the safe reopening of travel and a strong summer, and we are currently focused on working with the UK Government Travel Task Force in the coming days and weeks. We are hopeful that progress will continue to be made with the vaccination programmes in Europe, with several countries in Europe having indicated they will be welcoming British tourists this summer. We remain of the view that international travel can restart and that, with the right framework in place, restrictions can be safely and progressively reduced and in some cases removed by mid-summer for key destinations. We’ve kept our fleet in a flight-ready mode so we are ready and able to ramp up our services quickly and increase our capacity where we see increased demand for the summer.”

easyJet now operates up to ten routes from Birmingham, offering services to a range of city and beach destinations across the UK and Europe.

Top Copyright Photo: easyJet (UK) Airbus A321-251NX WL G-UZMD (msn 8421) PMI (Javier Rodriguez). Image: 951131.

easyJet aircraft slide show:

La Compagnie launches Airbus A321neo service

First A321neo, delivered on May 18, 2019

La Compagnie on D Day (June 6) launched service between Paris (Orly and Newark with its first Airbus A321neo.

The new Airbus A321s will replace the older Boeing 757-200s.

Airbus also made this announcement:

The first single-aisle A321neo destined for La Compagnie, an exclusively business-class French airline operating scheduled transatlantic flights, commence transatlantic services on June 6 from Paris Orly Airport to Newark Liberty International Airport.

On lease from GECAS, La Compagnie’s A321neo is powered by CFM International LEAP 1A new generation engines and features a business class only cabin with 76 full flat seats, offering passengers unmatched comfort. The cabin also includes a high level of connectivity onboard.

With this brand new A321neo, La Compagnie becomes the latest A321neo operator. The airline has two new A321neo aircraft on order.

La Compagnie’s A321neo will be presented on the Airbus static display at the Paris Air Show on June 18 (professional day).

The A320neo and its derivative aircraft family members are the world’s best-selling single aisle aircraft with over 6,500 orders from over 100 customers since its launch in 2010. It has pioneered and incorporated the latest technologies, including its new generation engines and the industry’s reference cabin design, delivering 20 percent fuel cost savings alone. The A320neo also offers significant environmental benefits with nearly a 50 percent reduction in noise footprint compared to previous generation aircraft.

Top Copyright Photo: La Compagnie Airbus A321-251NX WL F-HBUZ (msn 8866) BSL (Paul Bannwarth). Image: 946596.

La Compagnie aircraft slide show:

Video: With the new A321neo from La Compagnie, fly business class like never before. On board, you’ll find 76 full flat seats that fully recline into beds, a state-of-the-art entertainment system and Free, unlimited Internet access for all passengers. Discover this one-of-a-kind plane, wholly dedicated to the business class experience. The Plane to Be. Illustrated by Gaetan Heuzé.