British airline easyJet has warned that its first ever annual loss could be as much as £845 million as the continuing COVID-19 pandemic has caused it to fly just 25% of its planned capacity.
The airline has signalled to the UK government that it may need more financial support, according to media reports.
The headline loss before tax forecast for the year ended that on September 30 of £815 million to £845 million was worse than the loss of £794 million expected by analysts, Refinitiv Eikon data showed.
That is the first time easyJet, which was founded in 1995, has ever made a full-year loss.
With travel at very low levels, most European airlines are bleeding cash. EasyJet's larger low-cost rival Ryanair has called this winter a "write-off".
EasyJet said that, due to ongoing travel restrictions, it will fly just 25% of its planned capacity for the rest of 2020.
At such levels and with no recovery in sight, easyJet's finances will continue to remain under pressure. CEO Johan Lundgren called on Thursday October 7 for Britain to "step up with a bespoke package of measures" to help airlines.
To survive the pandemic so far, easyJet has taken a £600 million loan from the government, cut 4,500 jobs, raised £608 million from selling aircraft and tapped shareholders for £419 million pounds. It said that it might have to do more.
"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," the airline said in a statement.
Bernstein analyst Daniel Roeska said that easyJet is managing the downturn well, but, like all airlines, it needs a recovery to come in 2021 as "absent this, the industry will face an existential threat."
On easyJet specifically, he said, "On current liquidity, the company needs air travel to start recovering for Easter or summer 2021 at the latest; failing that, we would be wary of a further capital raise."
Focussed On Flying Profitably To Conserve Cash
EasyJet, the net debt of which soared to £1.1 billion from £326 million this time last year, said that it is focussed on flying profitably to conserve cash and that has helped it reduce cash burn in its fourth quarter compared with the third.
The airline will formally report annual results on November 17.
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