Airline passenger numbers are already starting to dry up in reaction to the Omicron scare, according to latest commentary from EasyJet (EZJ), news that will worry investors and dragged on sector share prices.

Shares in EasyJet lost 1.6% at 494.5p as of midday Tuesday, with BA-owner International Consolidated Airlines (IAG) and Wizz Air (WIZZ), the FTSE 250 Europe-based discount carrier, also losing ground, down 2.4% and 02% respectively to 127.88p and £39.24.

Ryanair (RYA) bucked the down trend, nudging 0.4% in morning trading to €14.36. It is in the process of abandoning London for Europe’s stock markets.

DEMAND ‘SOFTENING’

EasyJet said it has seen some softening of bookings in its current quarter though it expects to be back to 2019 flight levels by this time next year.

The budget flyer admits that it is too early to determine the impact of the new omicron strain of coronavirus on European air travel, but new travel restrictions, if they stick, will worry anyone with an interest in the UK and European air travel space.

News that the October half-term, skiing and Christmas demand had been encouraging, will help the mood some, but EasyJet’s decision to expand its fleet size by 25 aircraft and add extra slots at Gatwick, Porto, Lisbon and Linate may be cause for concern.

As it stands, EasyJet is planning for 65% of 2019 travel levels and 70% in the first three months of 2022 before rising to near 100% by the end of the 2022 financial year which runs through to 30 September.

ENOUGH FOR INVESTORS?

Looking ahead, Johan Lundgren, chief executive, said the airline was positioning itself for recovery with a radical reallocation of aircraft to higher contributing bases plus other initiatives such as shifting to ‘dynamic pricing’ in ancillaries such as baggage charges.

Time will tell if this is enough to keep investors onboard given the damage already done to the airline’s finances. Losses for the year to 30 September 2021 were £1.14 billion, slightly ahead of market forecasts, while the cash burn was also better than forecast at £36 million per week. Net debt at the end of the year was £910 million with another £4.4 billion of lending capacity should the company need it.

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Issue Date: 30 Nov 2021