Easyjet published its earnings forecasts for its 2020-2021 fiscal year on October 12, which ended on September 30. In view of the loss to come, the British low-cost company has had a complicated year: it is expected to post a pre-tax deficit of more than one billion euros. But it gained momentum this summer by significantly increasing its capacity, its number of passengers and its load factor until it posted a positive operating result for this last quarter, at 47 million euros.
Between July and September, Easyjet operated nearly 96,000 flights, compared to barely 60,000 in the first nine months of the fiscal year. It has put up to 259 devices online for this. The occupancy rate rose to more than 77%, with a peak of almost 79% in August, while it had been struggling to reach 70% until then. In the end, this represents more than 13 million passengers transported.
Restart of business traffic in September
The orange company has, a priori, benefited from the good performance of certain destinations in southern Europe this summer, as well as the resumption of business traffic from September. This mainly comes from small and medium-sized businesses, which resume travel more quickly than large groups and which do not have contracts with traditional companies. This movement is also present in other low-cost companies such as Transavia. In France, Easyjet also claimed a quarter of business traffic in September.
The downside remains the traffic between the United Kingdom and the Continent. The restrictions put in place by the British government on entry into its territory continued to strongly impact trafficking. The easing introduced on October 4 should nevertheless make it possible to restart activity.
Johan Lundgren, Managing Director of Easyjet therefore intends to continue this increase in capacity over the fiscal year which is beginning: “We are encouraged by the positive dynamics of reservations for fiscal year 2022, which has led us to increase our capacity plans. for the first quarter to fly up to 70% of 2019 levels. “
Results still far from the mark
Although encouraging, its results remain a far cry from the boom years of Easyjet. In the summer of 2019, it was carrying 28 million passengers with an occupancy rate of over 93%.
This is strongly felt in the financial figures. The generation of an operating profit of 40 million euros in the fourth quarter is notable for the company, as is the generation of more than one billion euros in turnover against less than 250 million in the previous quarter. However, the pre-tax result for the summer remains negative at around 165 million euros. The situation therefore remains difficult, especially when we know that summer is the most profitable season.
By comparison, it had a turnover of 2.3 billion euros and a pre-tax profit of more than 600 million euros in the summer of 2019.
Over the year, turnover just exceeded 1.7 billion euros and the pre-tax deficit will therefore remain substantial. This is valued between 1.34 and 1.38 billion euros. The company nevertheless maintains a high level of liquidity, with “unlimited access” to more than 5 billion euros and net debt down from more than 200 million euros to around 1 billion euros.
Recapitalization before buyout?
Easyjet is also in the process of finalizing a capital increase of 1.4 billion euros, the subscription being completed on September 27. This operation is largely defensive as was the case for other European companies until then, starting with Air France. It should allow the orange company to raise its own funds and significantly improve its balance sheet, damaged by the health crisis.
When the subscription was launched, Johan Lundgren nonetheless showed offensive inclinations, believing that this capital increase “will also allow us to position ourselves for growth, so that we can take advantage of strategic investment opportunities that should come forward as the European aviation industry emerges from the pandemic. “
For the moment, it is especially Easyjet which has been in the center of the envy. Taking advantage of a favorable window of fire, Wizzair made a first approach for the takeover of the British company. This was rejected by the board of directors, but above all because of an insufficient price. The door therefore seems open to future offers.