- EasyJet plc forecasts up to £845 million of pre-tax loss in fiscal 2020.
- The low-cost air carrier booked a £120 million nonheadline charge in H2.
- The British airline refrains from giving detailed guidance for fiscal 2021.
In an announcement on Thursday, EasyJet plc (LON: EZJ) said it expected to conclude the current financial year in loss. The company also resorted to cancelling its dividend to cushion the economic blow from COVID-19. EasyJet closed three of its bases in the UK as the Coronavirus pandemic continued to curb travel demand in August.
Shares of the company jumped close to 3% on market open on Thursday but gave up the entire intraday gain in the next hours. EasyJet is now trading at 518 pence per share. In comparison, the London-based airline was trading at 1,430 pence per share at the start of the year.
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EasyJet booked a £120 million nonheadline charge in H2
On an adjusted basis, the low-cost airline forecasts £815 million to £845 million of pre-tax loss in the financial year that concluded on 30th September. In comparison, it had reported £427 million of profit in the previous year. FactSet consensus for EasyJet’s pre-tax loss in the recently concluded financial year stands at £745.9 million. An airline union official said late in September that EasyJet was hanging by a thread.
The company estimates a value of £120 million for a nonheadline charge that it booked in the fiscal second half, attributed to restructuring. At 48 million, passenger number, the British air carrier said, came in 50% lower. Load factor registered at 87.2% that represents a 4.3 percentage points decline in fiscal 2020.
EasyJet’s consultations with its pilots and cabin crew in the United Kingdom were successful and resulted in minimising the need for compulsory layoffs. Similar consultations, it added, were ongoing in Switzerland, Portugal, and Germany.
EasyJet refrains from giving detailed guidance for fiscal 2021
For fiscal 2021, the budget airline forecasts capacity to remain at 25% in the first quarter. But expresses confidence that it will quickly increase capacity as soon as demand recovers. For summer 2021, EasyJet said that early booking levels matched previous years.
EasyJet refrained from giving guidance for fiscal 2021 on Thursday and said:
“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.”
EasyJet performed fairly upbeat in the stock market last year with an annual gain of more than 25%. At the time of writing, the British low-cost air carrier is valued at £2.37 billion and has a price to earnings ratio of 8.77.
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