EasyJet shares rise 8% on bookings despite coronavirus crisis

An EasyJet plan. 

Airline EasyJet plans to fly at 40% of its capacity over the rest of the summer thanks to stronger than expected bookings despite continuing pandemic uncertainty. Its shares rose 8%.

A tentative return to air travel in Europe from mid-June after a three-month pause brought airlines to their knees has been threatened by a fresh rise in Covid-19 cases, with the UK already reintroducing travel restrictions to Spain.

But EasyJet said late summer bookings were “performing well” and it would now fly 40% of last year’s capacity in its fourth quarter, compared to earlier guidance of 30%, with its focus on profitable flying and its flights about 84% full.

Its shares, which have lost more than 60% of their value since the start of the year, jumped 8% to 547 pence.

The airline also said its cash burn for the three months ended June 30 was better than expected, at £774m rather than the £1bn guided, and that its fourth-quarter loss would be smaller than the £324.5m loss booked in the third quarter.

“An encouraging report for the return to service, with healthy load factors,” said Bernstein analyst Daniel Roeska.

EasyJet, which said in May it would need to cut 4,500 jobs, has taken a more cautious approach than rivals. 

Europe’s largest budget carrier, Ryanair, said its capacity would rise to 60% in August and 70% in September, while smaller player Wizz Air is at about 70%.

Johan Lundgren, EasyJet’s chief executive, said beach destinations like Faro and Nice were popular but the market would remain unpredictable.

“There still is uncertainty you know, also in September, and there’s very little visibility for the whole of the industry on what’s going to come in the winter,” he told reporters. 

Ryanair was forced to cut its annual passenger target last week, warning of the impact of a potential second wave of the virus.

It flew 4.4 million passengers in July, a broadly expected 70% year-on-year fall after it operated around 40% of its normal July schedule with a 72% load factor, a measure of how well an airline fills its available seats. 

Meanwhile, Hungarian low-cost carrier Wizz Air said off and on-again Covid-19 restrictions meant the travel industry’s recovery would be bumpy, and it could not provide financial guidance for the current year.

Britain reintroduced a 14-day quarantine for arrivals from Spain this week, and worries about a second wave of coronavirus infections in Europe pose a new challenge for airlines seeking a recovery after the pandemic grounded flights for months.

“I think this is going to become more of a rollercoaster,” Wizz’s chief executive József Váradi said when asked about the shape of the recovery. 

Wizz, whose main focus is eastern Europe but which is expanding its presence in western Europe, said the uncertainty meant it could not provide profit guidance, but it hoped to be operating at about 70%-80% capacity over the rest of 2020. 

- Reuters