EasyJet says it remains confident about the UK’s outbound travel prospects this summer, despite the constraints on leisure travel compared with those in mainland Europe.
The airline on Tuesday (20 July) revealed it has sold significantly more of its intra-EU capacity compared to ex-UK capacity, blaming the uncertainty around the UK’s travel rules.
However, it said it expected the situation to converge now the UK government has waived quarantine for fully vaccinated amber list arrivals.
Posting its third-quarter results on Tuesday (three months to 30 June), easyJet said its "disciplined" approach to capacity and cost management guided the airline to a £318 million pre-tax quarterly loss, an improvement of 8% on the same period last year (£347 million) during which its fleet was fully grounded "for all but two weeks".
The carrier said the loss was "in line with expectations" set out in its Q1 trading update having managed to cut Q3 cash burn to £55 million and limit fixed costs and capital expenditure to an average of £34 million a week – exceeding its Q1 guidance.
Its aim is to up Q4 capacity (three months to 30 September) to 60% of 2019 levels to capitalise on the reopening of travel in continental Europe and the easing of travel restrictions for those in the UK who are fully vaccinated, with a focus on moving capacity to popular routes in line with demand.
Chief executive Johan Lundgren said that by playing to the carrier’s strengths, easyJet would emerge from the pandemic with "longer-term wins", a sustainable approach to cost reduction and a more flexible outlook.
"While we know the road to recovery from the pandemic isn’t going to be a straight line, we are ready to compete using these new-found strengths with everything we have learned leaving a long-term, positive imprint on the airline, transformed ready for the post-pandemic era.”
EasyJet paid out a further £112 million in refunds during Q3, taking its total refund outlay during the pandemic to £1.2 billion. Around £230 million remains tied up in vouchers held by customers.
Q3 passenger numbers increased to three million and capacity to 4.5 million seats, up significantly on the 117,000 passengers flown in Q3 2020 during the height of the first wave of the pandemic. Q3 capacity, though, remained 83% down on 2019 levels.
Load factors have steadily increased throughout the quarter from 52% in April to 68% in May when the UK government lifted its ban on outbound leisure travel and finally to 72% in June, averaging 66% for the quarter.
EasyJet said it achieved this by switching significant capacity from the UK to the EU, most notably reallocating UK-Palma capacity to Berlin "to serve stronger traffic flows" in Europe.
Additional UK capacity was laid on in late-June for green list destinations such as Malta and Madeira, including several new routes, and on 74 amber list routes following the UK government’s 8 July decision to lift quarantine for fully vaccinated amber list arrivals from Monday (19 July).
The airline said it had also capitalised on the collapse of Aer Lingus Regional operator Stobart Air in June to "further build out" its domestic leisure network, adding 12 new UK domestic routes and "topping up" capacity on others.
Additionally, it has sought to take advantage of another summer of heightened demand for domestic leisure travel. "In response to the continuing UK government travel restrictions, we have focused capacity on UK domestic leisure opportunities, notably to Jersey, Bournemouth and Newquay," said easyJet.
However, owing to the difference between UK government and EU travel policy, bookings were "heavily skewed" towards continental Europe. "While our business is normally split 50:50 between the UK and Europe, at present, two-thirds of bookings are coming from Europe."
With passengers continuing to book closer to departure, intra-EU capacity is more sold than ex-UK capacity, which easyJet said was "due to the uncertainty around government restrictions" – although it does expect this gap to narrow quickly as the UK eases its travel restrictions.
UK capacity is currently 44% sold, compared with 69% at the same stage in 2019, while intra-EU capacity is 53% sold, compared with 64% at the same point in 2019.
"We remain confident about demand for travel this summer and into autumn, due to the bookings surges experienced following selective easing of travel restrictions," said easyJet, citing the UK government’s decision to waive quarantine for fully vaccinated amber list arrivals.
EasyJet added it expecting pricing to be "relatively benign" over the coming months