EasyJet’s full-year results make for ugly reading and reflect a period where the business and its industry have been turned upside down through no fault of their own.
“Shareholders have suffered a sharp decline in the share price this year and the temporarily cessation of the dividend. Customers have had to contend with cancelled flights and the long road to trying to claim refunds,” according to AJ Bell.
“It’s been a miserable experience for everyone involved, including those working for EasyJet, which is making more job cuts, freezing pay and switching some staff to seasonal contracts.
“The recent double dose of good news on the vaccine front from Pfizer and Moderna’s trials certainly gives some hope to society that the world can start to return to normal. Airlines like EasyJet need consumers to feel more confident about being about to move around safely, otherwise few people are going to book plane tickets.
“The late summer pick-up in business was encouraging for the sector but optimism quickly waned when new lockdown restrictions began to be rolled out in various parts of the world.
“Being stuck inside during the autumn and winter periods could fuel pent-up demand for wanting to go on holiday. Once lockdown restrictions start to ease again, a more optimistic consumer may well feel the time is right to book a break away.
“EasyJet needs that event to happen sooner rather than later so cash inflows can start to radically improve. Even when demand picks up, EasyJet faces the prospect of intense price competition in the industry as airlines rush to attract business to aid their recovery.
“Investors have been bidding the shares up in recent weeks on hopes that an imminent vaccine will revive society and therefore the airline sector. Unfortunately for EasyJet its financial situation will still remain fragile even once business picks up as any recovery will take a long time to return the sector to pre-Covid health.”