In a trading update for the year ended 30 September 2021, easyJet has reported an improvement in its headline loss for the quarter and positive operating cash flow and forward booking momentum. The airline’s headline loss before tax for the year ended 30 September 2021 is expected to be between £1,135 million and £1,175 million compared to consensus of £1,175 million. Fourth quarter headline losses decreased by more than half year-on-year with the generation of c.£40 million of operating cash. Coupled with these earnings, easyJet has reduced net debt to c.£0.9 billion from £2.0bn in Q3, following the successful £1.2 billion rights issue, of which £90 million was received after 30 September 2021.
easyJet also reports “positive momentum carried into FY22 with H1 bookings double those of the same time last year”.
During its fourth quarter easyJet flew 17.3 million seats, operating 58% of FY19 capacity with a stronger performance on intra-European and UK domestic routes. In Q4, domestic traffic in UK and intra-European flying was 77% of FY19 levels, whereas UK International travel was just 32% of FY19 levels.
Continental European load factors were 83.0%, in the quarter, which accounted for 62% of capacity. In comparison, UK international travel was significantly impacted by the UK governments onerous and expensive travel restrictions, resulting in load factors of 63.2%.
easyJet now expects capacity to be up to 70% of 2019 levels in Q1 2022.
Johan Lundgren, CEO of easyJet, said: "During the quarter easyJet significantly ramped up its flying which meant we were the second largest airline operating in Europe this summer while also halving our Q4 losses versus last year. We are encouraged to see positive booking momentum into FY22 which has led us to increase our capacity plans for Q1 to fly up to 70% of 2019 levels.
"It is clear recovery is underway. Business travel is returning to easyJet with corporates and SMEs attracted by our value, network and approach to sustainability. We have seen city breaks beginning to return alongside growing demand for leisure travel from customers looking for flights and holidays to popular winter sun destinations including Egypt and Turkey. October half term bookings have been strong, particularly to the Canary Islands where we have increased our capacity to c.140% of FY19 levels.
"Having successfully completed our rights issue and strengthened the balance sheet, we will take advantage of strategic investment and growth opportunities to deliver strong shareholder value."
Total group revenue and headline costs for the fourth quarter is expected to be around £1,000 million and around £1,140 million respectively. easyJet has delivered c.£510 million of savings in FY21, of which almost half will be sustainable, says the airline, adding that the sustainable benefits “will help partially mitigate inflationary pressures and cost headwinds in ownership costs and navigation charges”. easyJet is c.55% hedged for fuel in the financial year ending on 30 September 2022 at c.US$500 per metric tonne with the spot price as at 11 October 2021 being US$760.
Cash burn on a fixed costs plus capex basis during the quarter was c.£36 million per week on average, coming in under the guidance of £40 million per week.
The company states that it has delivered “dynamic schedule updates”, with a two to four-week lead time, to capitalise on all available demand.
easyJet warns that given the current competitive landscape, yield continues to remain under pressure.
As at 30 September 2021, easyJet has unrestricted access to c.£4.4 billion of liquidity. The next debt maturity is £300 million of commercial paper, issued under the CCFF scheme, which is due to be repaid in November 2021. easyJet has no other debt maturities until the 2023 financial year.
easyJet’s net debt position at 30 Sept was c.£0.9 billion (30 September 2020: £1.1 billion) including cash and cash equivalents of c.£3.5 billion.
In line with easyJet's dividend policy and considering the expected loss, the board will not be recommending the payment of a dividend in respect of the year to 30 September 2021. Full results for the year ended 30 September 2021 will be reported on 30 November 2021.