EasyJet warns first ever annual loss could top $1 billion

By Sarah Young
LONDON (Reuters) - UK airline easyJet <EZJ.L> warned Thursday that its first annual loss could be as high as £ 845 million ($ 1.1 billion) as the pandemic meant it was only 25% the planned capacity flew.
According to media reports, the airline has signaled to the government that it may need more financial support.
The total pre-tax loss for the fiscal year ended September 30 of £ 815 million to £ 845 million was worse than analysts' anticipated £ 794 million loss, data from Refinitiv Eikon showed.
This is the first time easyJet, founded in 1995, has posted a year loss.
Most European airlines are bleeding hard cash when traveling at very low levels. EasyJet's bigger low-cost rival, Ryanair <RYA.I>, called this winter a "write-off".
EasyJet said ongoing travel restrictions meant it would only fly 25% of planned capacity for the remainder of 2020, behind Ryanair, which is targeting 40% in October.
At this level, and with no recovery in sight, easyJet's finances will remain under pressure. CEO Johan Lundgren on Thursday called on the UK to "develop a bespoke package of measures" to help airlines.
To survive the previous pandemic, easyJet has taken out a £ 600million government loan, shed 4,500 jobs, raised £ 608m from aircraft sales and won shareholders for £ 419million. They said it might have to do more.
"EasyJet will continue to review its liquidity position on a regular basis and consider further financing options, including sale-and-lease-backs, if necessary," the airline said in a statement.
Bernstein analyst Daniel Roeska said easyJet weathered the downturn well, but like all airlines it took a recovery to come to 2021 because "without it, the industry will face existential threats".
Regarding easyJet in particular, he said: "In terms of current liquidity, the company needs air travel in order to recover by Easter or summer 2021 at the latest. Otherwise, we would be cautious about another capital increase."
In the UK, airlines have called for tax breaks and other measures to deal with the crisis, as well as an airport testing system for COVID-19, in order to shorten the UK's 14-day quarantine rule that is now in place in most European countries.
The government said it is looking at ways to reduce quarantine, with a report due out in early November.
EasyJet, whose net debt rose to £ 1.1 billion from £ 326 million a year earlier, said it was geared towards flying profitably to save money and that this helped reduce cash consumption in the fourth quarter compared to the third Quarter lower.
Its shares fell 0.9% to 517 pence at 0722 GMT. The stock has lost 62% of its value so far in 2020.
The airline will officially release the annual results on November 17th.
(Reporting by Sarah Young, Editing by Kate Holton and Mark Potter)

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