British low-cost airline group EasyJet has warned that it is set to post an annual loss of over £800 million this year, the first in its 25-year history.
Aside from its projected first annual loss, EasyJet also said that it expects to operate at just 25% of normal capacity into next year. This was despite the airline saying in a trading update that it had taken tough measures to cut costs.
According to the airline, it expects a pre-tax loss of between £815 million to £845 million in the current financial year, which is worse than the £794 million loss in analysts' forecasts.
While the budget airline did not mention anything about needing state aid in the aforementioned trading update, Sky News made a report about EasyJet calling on the government for more financial support.
Need for more state aid
EasyJet chief executive officer (CEO) Johan Lundgren said: "Aviation continues to face the most severe threat in its history and the UK government urgently needs to step up with a bespoke package of measures to ensure airlines are able to support economic recovery when it comes."
Due to the impact of the coronavirus pandemic, the British carrier has already taken a government loan of £600 million, reduced its workforce by 4,500 jobs, raised £608 million by selling aircraft, and got £419 million from its shareholders.
According to EasyJet, it would "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".
Although Sky News reported that the airline has alerted government ministers about possibly needing further financial support, no formal request has been made. However, an EasyJet source said the airline "would keep all its funding options open" as a difficult winter trading period looms.
Flying at 25% capacity
EasyJet was operating at 38% capacity from July to September but the airline said it would fly just 25% of planned capacity for the rest of 2020 and into 2021 due to ongoing travel restrictions.
It added that holidaymakers are booking at a "very late stage" and demand for destinations are rapidly changing due to ever-changing quarantine rules.
Also, the 4,500 job cuts at the firm represented almost one third of its total workforce.
EasyJet said: "Removing cost from the business is a key management priority and will position EasyJet to emerge from the pandemic in an even more competitive position for the long term."
"At this stage, given the continued level of short-term uncertainty, it would not be appropriate to provide any financial guidance for the 2021 financial year," it added.
The global airline industry has really taken a big hit from the coronavirus pandemic and airlines are expected to record unprecedented losses as a result.
In June, the International Air Transport Association (IATA) released a forecast that the airline industry may lose $84 billion in 2020 after air travel dropped by 98% in April compared to last year.
"We think airlines are going to probably lose an unprecedented $84 billion in 2020," Brian Pearce, chief economist for IATA, told CNBC.
"We’re really only just starting to see countries negotiating bilateral openings of markets. For example, the Trans-Tasma bubble between Australia and New Zealand, China and Singapore, as well as China and Korea."
