TIDMEZJ
RNS Number : 4395B
easyJet PLC
08 October 2020
8 October 2020
easyJet plc
('easyJet')
easyJet Trading Update for the year ending 30 September 2020
Summary
During its fourth quarter easyJet carried more than nine million
customers, with enhanced bio security measures in place across its
full flight schedule which, along with punctuality of 94%, led to
high customer satisfaction during the period.
easyJet has operated a disciplined flying programme over the
summer alongside launching a major restructuring programme. easyJet
remains focused on cash generative flying over the winter season in
order to minimise losses and cash burn during the first half of
FY21. easyJet has raised over GBP2.4 billion in cash since the
beginning of the Covid-19 pandemic and is well positioned to
weather the ongoing challenging environment and capitalise on a
recovery, once government travel restrictions are eased.
Johan Lundgren, CEO of easyJet, said:
"At the beginning of this year, no one could have imagined the
impact the pandemic has had on the industry. easyJet has adapted
and risen to the challenges presented by the pandemic by taking
decisive actions to minimise losses, bolster liquidity and reduce
cash burn while launching a major restructuring programme, having
completed the UK consultation and commenced consultations in a
number of key countries.
"Throughout we have taken a very prudent and conservative
approach to capacity and this disciplined approach has seen us
deliver a better than expected cash burn outcome in Q4 and will see
us continue to focus on profitable flying over the winter season in
order to minimise losses and cash burn during the first half of
2021.
"Based on current travel restrictions we expect to fly c.25% of
planned capacity for Q1 2021 but we retain the flexibility to ramp
up capacity quickly when we see demand return and early booking
levels for summer '21 are in line with previous years.
"Aviation continues to face the most severe threat in its
history and 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.
"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.
"I would like to thank everyone at easyJet who has worked
tirelessly to manage through this period. I believe that, as a
result, and due to our decisive response to the pandemic, we are
well positioned for the recovery".
Revenue
Passenger numbers(1) for the full year decreased by 50% to 48
million, in line with a decrease in capacity(2) of 48% to 55
million seats. Load factor for the full year will decrease by 4.3
percentage points to 87.2%.
Capacity in the fourth quarter was 38% of previously planned
levels with easyJet flying nine million passengers during the
period with a load factor of 76.3%. Total group revenue for the
quarter ending 30 September was c.GBP620 million.
Cost / Cash burn
Total headline cost for the full year decreased by c.36% to
c.GBP3,840 million, mainly driven by a decrease in capacity flown.
Despite the constantly evolving travel restrictions across Europe
and resultant impact on customer demand, easyJet maintained a
disciplined approach to capacity and cash management. As a result,
total cash burn during the fourth quarter is expected to be less
than GBP700 million, which compares favourably to the GBP774
million in Q3.
As previously announced, easyJet has launched a major
restructuring and cost-out programme to drive down costs in all
areas of the business. Removing cost from the business is a key
management priority and will position easyJet to emerge from the
pandemic in an even more competitive position for the long
term.
As part of this restructuring programme easyJet launched an
employee consultation process on proposals to reduce staff numbers
by up to 30%, including optimising our network and bases, improving
productivity and promoting more efficient ways of working.
The UK consultations with management and administration staff,
UK cabin crew and UK pilots have now concluded successfully.
Discussions with the relevant unions and works councils were
constructive and have resulted in greatly increased seasonal and
flexible working patterns whilst avoiding the need for compulsory
redundancies. This will make a material difference to our annual
cost base and cash burn, particularly over the winter months. The
targeted UK cost savings have been achieved, plus our future UK
winter crew cost base has the ability to be flexed down materially
in line with demand.
Consultation processes are underway in Germany, Portugal and
Switzerland.
There will be a non-headline charge of around GBP120 million
taken in H2'20 relating to restructuring. The continuing
availability of furlough schemes in continental European markets,
in addition to the more variable contracts which were proposed by
our unions in the UK, will enable us to conserve cash over the
winter months whilst thinning our schedules far more than ever
before to allow us to match capacity with customer demand.
Fuel & FX
easyJet's total fuel cost for the financial year 2020 is
expected to be around GBP720 million. The non-headline charge which
will be taken in H2'20 related to discontinued hedges and hedge
ineffectiveness will be around GBP145 million.
Total headline foreign exchange will have a year-on-year
positive impact of around GBP30 million.
Capacity
During Q4 easyJet flew 38% of planned capacity. Flying peaked in
August and then tapered significantly during September when
customer demand was materially affected by changes in government
travel guidance and quarantine rules. Customers are booking at a
very late stage and visibility remains limited.
July August 2020 September Q4
2020
2020 2020
Number of flights 13,992 30,849 21,692 66,533
------- ------------ ---------- -------
Peak operating aircraft 147 214 184 214
------- ------------ ---------- -------
Passengers (thousand)
(1) 2,183 4,313 2,873 9,369
------- ------------ ---------- -------
Seats flown (thousand) 2,601 5,664 4,013 12,277
------- ------------ ---------- -------
% of planned capacity
flown 24% 52% 39% 38%
------- ------------ ---------- -------
Load factor (3) 83.9% 76.1% 71.6% 76.3%
------- ------------ ---------- -------
easyJet remains extremely disciplined in focussing on profitable
flying. We typically thin our route frequencies during winter and
will do so much more significantly this year. Our operations,
financial and commercial teams have been working on dynamic
schedule updates, with a two to four week lead time, in order to
capitalise on all available demand.
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
maximising returns. The scale and flexibility of our network will
provide us with opportunities to take advantage of changes in the
competitive landscape during the recovery phase. easyJet will act
quickly to selectively acquire attractive slots made available in
locations where the opportunity arises. As part of the
restructuring programme easyJet has closed its bases in Southend,
Stansted and Newcastle, although Stansted and Newcastle continue to
be served on an inbound flying basis. As part of this optimisation
of bases, easyJet will be opening seasonal bases in Malaga and Faro
during summer '21.
Customer demand has shifted rapidly over the summer amongst our
many different leisure destinations, influenced largely by which
countries and regions are quarantine-free. Increasing travel
restrictions have once again suppressed customer demand for this
autumn, with late customer booking patterns leading to visibility
remaining limited. Early booking levels for summer '21 are in line
with previous years.
Liquidity
easyJet has taken swift and decisive action to raise over GBP2.4
billion in cash since the beginning of the Covid-19 pandemic, from
a diversified range of funding sources including debt and equity.
Following the conclusion in August of the GBP608 million sale and
leaseback programme, around 50% of the fleet remains unencumbered.
easyJet expects to have 337 aircraft in the fleet as at end
October.
These measures have further underpinned easyJet's liquidity
position and credit metrics while also enhancing our balance sheet
strength to provide a significant liquidity buffer. With a cash
position at 30 September 2020 of c.GBP2.3 billion, combined with
the actions which we are taking on thinning our routes in Q1 and
removing cost, it will enable us to conserve cash over the winter
months. As previously indicated, easyJet will continue to review
its liquidity position on a regular basis and will continue to
assess further funding opportunities, including sale and lease
backs, should the need arise.
As at 30 September 2020 our net debt position was GBP1.1 billion
(30 September 2019: GBP326 million) including cash and cash
equivalents of c.GBP2.3 billion.
Outlook
easyJet expects to report a group headline loss before tax in
the range of GBP815 to GBP845 million for the financial year 2020.
easyJet's group headline loss in Q4 is therefore expected to be
lower than the loss in Q3. Non-headline items of around GBP440
million are expected to be recognised in the financial year 2020
incorporating hedging ineffectiveness, easyJet's restructuring
programme, impairment of short term lease contracts and gains from
sale and lease back transactions. In line with easyJet's dividend
policy and in light of the expected loss, the board will not be
recommending the payment of a dividend in respect of the year to 30
September 2020. Full results for the year ended 30 September 2020
will be reported on 17 November 2020.
Based on current travel restrictions in the markets in which we
operate, easyJet expects to fly c.25% of planned capacity for Q1
2021. We will cover the majority of our pre-existing network with
reduced frequency, taking advantage of the European slot waiver
mechanism put in place for this winter to best match our capacity
against the lower demand that currently exists. We remain focused
on cash generative flying over the winter season in order to
minimise losses during the first half. We retain the flexibility to
ramp capacity back up quickly when we see demand return.
At this stage, given the continued level of short-term
uncertainty, it would not be appropriate to provide any financial
guidance for the 2021 financial year.
PLC Board update
Further to the recent announcement that Moya Greene DBE has
decided that she will not be standing for re-election at the
Company's next AGM, we are pleased to confirm that Moni Mannings
will succeed Moya as Chair of the Remuneration Committee with
immediate effect.
KEY Q4 FINANCIALS
Three months ended 30 Sept 2020 30 Sept 2019 Change
Fav./(adv.)
Number of flights 66,533 172,739 (61.5%)
------------- ------------- -------------
Peak operating aircraft 214 321 (33.3%)
------------- ------------- -------------
Passengers (thousand) (1) 9,369 28,021 (67%)
------------- ------------- -------------
Seats flown (thousand) 12,277 30,020 (59%)
------------- ------------- -------------
Load factor (3) 76.3% 93.3% (17ppt)
------------- ------------- -------------
Total group revenue (GBP million) 620 2,280 (73%)
------------- ------------- -------------
Total group headline cost (GBP
million) (935) (1,752) 47%
------------- ------------- -------------
Group headline loss before
tax (GBP million) (295-325) 528
------------- ------------- -------------
For further details please contact easyJet plc :
Institutional investors and analysts:
Michael Barker Investor Relations +44 (0) 7985 890 939
Holly Grainger Investor Relations +44 (0) 7583 101 913
Media:
Anna Knowles Corporate Communications +44 (0) 7985 873 313
Edward Simpkins Finsbury +44 (0) 7947 740 551 / (0) 207 251 3801
Dorothy Burwell Finsbury +44 (0) 7733 294 930 / (0) 207 251 3801
A copy of this Trading Statement is available at
http://corporate.easyjet.com/investors
Notes:
1. Represents the number of earned seats flown. Earned seats
include seats that 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. 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.
4. All numbers in this statement are provisional and are subject
to audit.
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END
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