EasyJet warns of third consecutive annual loss

EasyJet expects to post its third straight annual loss as the costs of travel disruption and the drag from the strong dollar offset resurgent demand for flying.

The low-cost British airline on Thursday forecast a pretax loss of between £170 million (€194m) and £190 million for its financial year ending in September, after losing more than £1 billion in both 2020 and 2021.

The widespread travel disruption in the early summer cost £75 million, while the airline also reported a £64 million foreign exchange hit from the surging dollar as many of its costs are denominated in the US currency.

Still, EasyJet was profitable during the busy July to September quarter, when it flew 26.3 million seats, 88 per cent of 2019′s schedule before the pandemic hit.

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The airline said it expected this to fall to 20 million seats in the final three months of this year – 80 per cent of 2019 levels.

Chief executive Johan Lundgren said early signs for summer 2023 showed “continued demand” for travel, adding that cost cuts and changes to the business during the pandemic left EasyJet facing an “uncertain macro economic environment with many strengths”.

EasyJet’s trading update comes as investors and analysts struggle to predict the toll a weakening global economy will have on the robust rebound in demand for air travel. No major European airline has publicly reported a decline in bookings despite rising inflation leading to warnings of a cost-of-living crisis.

Airline shares have tumbled regardless as investors price in a difficult winter and rising costs. EasyJet’s shares have fallen 17 per cent over the past month, taking their drop to more than 50 per cent this year.

“The stock prices of European airlines suggest the market does not believe that demand will be sustained sufficiently to mitigate inflationary pressures,” HSBC analysts said in a recent note. – Copyright The Financial Times Limited 2022