EasyJet says Covid variant puts back fragile travel recovery

Bloomberg

EasyJet Plc said the omicron variant of Covid-19 is impacting short-term demand but hasn’t yet derailed a recovery in air travel.
The UK discount carrier has reined in capacity plans for the current quarter as some customers with reservations delay flying and others put off booking, it said in a statement. Demand for city-to-city flights has taken the biggest hit, with the beach-holiday market holding up comparatively well.
“The effect this has is definitely much more on the short-term departures,” CEO Johan Lundgren told Bloomberg Television. “Some people are moving their departures into the beginning of next year, and we’re also seeing that next summer is not affected at all.”
The EasyJet report provides some of the earliest evidence of how new border restrictions meant to stop omicron are
affecting demand for air travel.
The industry has been slammed repeatedly as governments respond to the health threats posed by the two-year-long coronavirus pandemic. Lundgren said the dip after the latest measures so far hasn’t been as steep as before.
“It’s still very early and we’ll need to wait for things to settle down,” he said. “We’ve seen in previous times, when there has been news such as this, you get an immediate drop off. It’s not as significant this time. It’s not to the same level of downside.”
Shares of EasyJet traded 2.9% lower at 488 pence in London.
Other airlines stocks also fell after the CEO of Moderna Inc suggested that a new vaccine might be needed to combat the omicron variant, given its plethora of mutations.
Lundgren’s comments come after Michael O’Leary, CEO of low-cost competitor Ryanair Holdings Plc, warned that spiraling infection rates were putting Europe’s nascent rebound at risk. That was before the emergence of omicron and Britain’s reintroduction of a red list of banned nations and mandatory PCR tests for arrivals, steps followed by other European countries. EasyJet has taken a more cautious approach to restoring flights than rivals such as Ryanair and Budapest-based Wizz Air Holdings Plc. The latter returned to pre-pandemic seating levels in the three months through September.
The British carrier had planned to lift capacity to 70% of normal levels this quarter, but cut that figure to 65%. It’s now targeting the 70% figure in the second quarter beginning January and something close to 2019 volumes by the summer peak, guidance Bernstein analyst Alex Irving said in a note is “reassuring for the shape of demand.”
EasyJet posted a pretax loss of 1.14 billion pounds ($1.5 billion) for the year through September, after revealing on October 12 that the figure was between 1.13 billion pounds and 1.17 billion pounds.