EasyJet calls for urgent UK government support to airline industry

EasyJet has demanded a bespoke support package for the airline industry as it warned it was on course to be more than £800m in the red this year, its first annual loss in its 25-year history.

The airline said it expected to make a pre-tax loss of between £815m and £845m for the year to 30 September 2020.

Johan Lundgren, its chief executive, said aviation was still facing the “most severe threat in its history” and called for more support from the state.

“The UK government urgently needs to step up with a bespoke package of measures to ensure airlines are able to support economic recovery when it comes,” he said.

EasyJet said it carried more than 9 million passengers between July and September, equivalent to 38% of capacity planned before the pandemic. It burned through almost £700m in cash during that period.

The company said it was focusing on profitable flying during the winter season, operating just a quarter of its usual schedule between October and the end of the year, in order to minimise its losses and cash burn.

EasyJet has raised more than £2.4bn in cash since the start of the pandemic, including a £600m loan from the Treasury and Bank of England’s emergency coronavirus fund it secured in April while its fleet was grounded.

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The airline has described itself as well-positioned to weather the current environment and for its business to recover once government travel restrictions were eased.

However, the company has signalled it may need further financial support from the state if flying continues to be disrupted by coronavirus.

The airline said it continued to review its liquidity position regularly and would “continue to assess further funding opportunities, including sale and lease backs, should the need arise”.

Lundgren said the company had taken decisive action to minimise its losses, reduce cash burn and boost its liquidity to face the challenges presented to aviation by the pandemic.

“At the beginning of this year, no one could have imagined the impact the pandemic has had on the industry,” he said.

“EasyJet came into this crisis in a very strong position thanks to its strong balance sheet and consistent profitability. This year will be the first time in its history that easyJet has ever made a full-year loss.”

The company plans to cut up to 30% of its workforce and close some of its UK bases, including at Stansted, Southend and Newcastle airports.

It has previously called on the government to help airlines with measures such as the removal of air passenger duty for at least 12 months.

Airlines and airports have been cutting jobs in an attempt to reduce costs, as passenger demand remains low because of the resurgence of the coronavirus in Europe, coupled with travel restrictions and quarantine measures.

Apart from the furlough job retention scheme, UK government intervention for the industry has been limited, according to Julie Palmer, a partner at insolvency specialist Begbies Traynor.

Palmer said airlines would be nearing the end of their cash reserves and called on the state to do more to support aviation.

“They need to step up to the plate and offer more aid for this sector,” she said, “not only to protect thousands of jobs, but also our ability to do business internationally post the pandemic.”