How bad are things at easyJet? Well, the backward-looking numbers are dreadful, obviously. An airline that has previously always made annual profits now expects a “headline” loss of £815m-£845m in the financial year to September, even before counting the whack from bad fuel hedges and redundancy and restructuring costs.
Yet it’s the forward-looking indicators that matter now, and easyJet is sending confused signals. The only simple part to understand was the familiar call by the chief executive, Johan Lundgren, for the government to “step up with a bespoke package of measures” for the aviation industry. He has a point: it’s shocking that it was only this week that ministers announced a “travel task force” to construct a decent Covid-testing system at airports.
But what about easyJet’s direct financial strain? The airline said it will fly at only 25% capacity in the current quarter, but when does that become a crisis? Does easyJet mean it could soon want more financial aid from the state, on top of the £600m already secured from the big-company coronavirus borrowing facility? It’s hard to tell.
If Rishi Sunak, the chancellor, scanned easyJet’s trading update, he would be forgiven for concluding there’s little to worry about. Removing costs has put easyJet in a position “to emerge from the pandemic in an even more competitive position”, the statement declared. While £700m of cash was burned in the last quarter and net debt reached £1.1bn, there was £2.3bn of liquidity at the end of last month.
Behind the scenes, one suspects the message is starker about financial risks if quarantine rules remain at their current settings for months on