EasyJet Reports £1.3 billion loss
It’s been a financially devastating year for the aviation industry as a result of COVID-19 travel restrictions. EasyJet, one of the UK’s biggest budget airlines recently reported a significant loss of GBP 1.3 billion in 2020 due to a substantial decline in passengers, compared to last year’s profit of £430 million.
2020 marked EasyJet’s 25th anniversary is the airline’s first financial loss in history, evidencing the catastrophic economic impacts of the coronavirus pandemic, particularly the 11-week grounding period between March – June.
Easyjet usually makes the majority of its profits during the summer months, particularly June – September. However, the UK government’s quarantine measures prevented incoming travellers to the UK, affecting popular destinations, including Spain and France.
For the year ending 30th September 2020, Easyjet confirmed a 50% decline in passengers from 96.1 million to 48.1 million people. The significant reduction in passengers led to a 52.9% drop in revenue for the full 2020 financial year.
Whilst it was hoped that passenger levels would pick up during the Autumn, travel remained low as the second wave of COVID-19 hit the UK, as Easyjet forecast flights to continue at 20% capacity for the foreseeable future. However, as news of Pfizer’s COVID-19 vaccine began to develop, the airline experienced a 50% boost in bookings, indicating that Easyjet could be on the road to recovery.
EasyJet CEO, Johan Lundgren, stated that the vaccine news is incredibly positive and that when the recovery comes, it will be strong. However, no-one has the visibility to say when it will happen.
Mr Lundgren also shared his disappointment at the UK government’s lack of financial support to the aviation industry in comparison to other European countries. To keep the company afloat, EasyJet has sold and leased back billions of pounds’ worth of aircraft, meaning that the airline now only owns around 55% of its aircraft.
Financial losses of other top UK airlines
It’s not just EasyJet who have suffered at the hands of COVID-19, as other leading UK airlines report their significant losses as a result of travel bans.
British Airways and Aer Lingus owner, IAG, confirmed a GBP 5 billion loss over nine months of 2020.
Ryanair confirmed a GBP 380 million loss for the first half of 2020, whilst Wizz Air reported a GBP 218 million loss during the same period, revealing that their passenger numbers declined by more than 80% during November when the UK’s second lockdown was imposed.
Around 2 million passengers flew with Ryanair in November 2020, compared to 11 million in November 2019, as Wizz air confirmed passengers were down 669,000 year-on-year.
Future for the aviation industry
Whilst the roll-out of the COVID-19 vaccine in the UK is a step towards financial recovery; the aviation industry still looks to be placed under pandemic pressures in 2021. Chief Medical Officer for England, Chris Whitty, recently stated that lockdowns could be imposed until March 2021 despite vaccinations.
The IATA (The International Air Transport Association) has forecast that the aviation industry will experience a 46% decline in profits in 2021, in comparison to 2019 figures. It’s thought that improvements within the airline industry would not be experienced until at least the second half of 2021, with the first half subject to extreme cost-cutting and increased demand.
IATA Director General and CEO, Alexandre de Juniac explained how many airlines have cut costs by 45.8%, with revenues down 60.9%. This operation means that airlines will lose USD 66 for every passenger carried for a total net loss of USD 118.5 billion and highlighted the importance of countries opening their borders.
It’s forecast that passenger levels in 2021 will grow to 2.8 billion, which whilst is one billion more than 2020, remains 1.7 billion less than 2019 figures. Furthermore, it’s thought that passengers will not reach pre-pandemic levels until at least 2024.