EasyJet, BA Hold to Summer Optimism as Vaccinations Stutter
(Bloomberg) -- Britain’s two biggest airlines said they remain optimistic that European travel markets will revive this summer even as vaccination campaigns stutter and plans to reopen borders are in limbo.
EasyJet Plc said Wednesday that while it will operate no more than 20% of 2019 capacity in the current quarter, it’s ready to ramp up flights from May given enough demand. British Airways said U.K. plans to resume travel are headed in the right direction and that Europe should follow suit in coming months.
There’s flexibility to rapidly boost operations and add destinations, EasyJet Chief Executive Officer Johan Lundgren said on a call, while cautioning that visibility over bookings is limited. The discounter lost as much as 730 million pounds ($1 billion) in the first half through March, according to a statement.
The airlines are talking up a travel rebound even as the likelihood of an imminent reopening remains uncertain. The U.K., their biggest market, has held back on confirming that citizens will be able to resume leisure travel from May 17, while the EU’s sluggish jabs program suffered a further blow when Johnson & Johnson delayed a vaccine rollout amid concern about side effects.
British Airways CEO Sean Doyle predicted a revival in EU states as immunizations gain traction, citing progress in Germany, and said he’s also hopeful highly profitable trans-Atlantic flights will reopen soon.
Shares of EasyJet traded up 4.9% at 969.60 pence as of 3:32 p.m. in London, extending gains so far in 2021 to 17%. BA owner IAG SA was priced 3% higher and is up 31% for the year.
Many commentators are less optimistic than the CEOs about a summer revival. Eamonn Brennan, director general of airspace manager Eurocontrol, said there’s no evidence as yet of a vaccine bounce, with flights down 64% this week compared with 2019, though things could improve from late May.
John Grant, chief analyst at data specialist OAG, said airlines are on “shifting sands,” being forced to scrap 20% of flights at seven day’s notice and pushing back capacity increases planned for the next few weeks to August and beyond. Capacity is now likely to reach only 80 million scheduled seats a week by late September even in a best-case scenario, 20 million below estimates, he said.
Bernstein analyst Daniel Roeska said EasyJet’s update indicated that fares also weakened last quarter, a worrying trend were it to continue into the summer.
What happens next in Europe remains an unanswered question despite recent government moves.
Lundgren said Mediterranean sunspots are keen to admit vaccinated Britons but that customers are being put off because the U.K. hasn’t said which countries it will reopen to first, with a requirement for everyone to undergo pricey Covid tests also acting as a brake.
BA’s Doyle said the plans need to be both simpler and more ambitious.
Robert Courts, the U.K. aviation minister, reiterated in testimony to the House of Commons transport committee that so-called Green List countries will be identified in early May based on data at the time. He advised people not to book holidays until the full roster is known.
Norwegian Air Shuttle ASA, which just emerged from insolvency proceedings, on Wednesday increased its fundraising goals to provide a stronger cash buffer amid uncertainty about the relaxing of travel rules.
While prospects for European travel remain clouded, there’s growing optimism that long-haul demand initially expected to remain in the doldrums for years may return faster than expected on some routes.
Doyle said high vaccinations rates in the U.K. and U.S. mean the countries have an opportunity to create a bilateral framework for flights that could be copied by elsewhere. And London Heathrow airport CEO John Holland-Kaye said on a Eurocontrol webinar that he sees a restoration of links to the U.S., Caribbean and Singapore as more likely in the next few months than services to Europe.
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