(Bloomberg) -- EasyJet Plc is seeing a stronger than anticipated rebound in passenger demand following the lifting of lockdowns, prompting it to accelerate the addition of flights.
The stock rose the most in two months after EasyJet said Tuesday that its aircraft flew 84% full in July. With bookings for late summer ahead of projections the carrier will operate 40% of capacity in the quarter through September, up from the planned 30%.
“I am really encouraged that we have seen higher than expected levels of demand,” Chief Executive Officer Johan Lundgren said in a statement. “We have now completed more than one month of restart operations and are seeing encouraging performance across the network.”
With Covid-19 infection levels declining in most of Europe, governments have been easing travel restrictions. Britain's biggest low-cost carrier was among the first European airlines to begin rebuilding up services, though has done so at a slower pace, helping it to cope with fluctuations in demand such as that created by the reintroduction of U.K. curbs on people arriving from Spain.
Sanford C. Bernstein analyst Daniel Roeska said in a note that EasyJet's seat-occupancy level and a lower-than-expected cash outflow were both “modestly encouraging.”
Shares of the Luton, England-based carrier traded 11% higher at 565 pence as of 9:44 a.m. in London, paring the decline this year to 60%.
Less Aggressive
A comparison of July traffic shows that EasyJet has been less aggressive than rival discounters in bringing back flights, resulting in higher occupancy levels.
The U.K. airline attracted 2 million passenger last month, whereas Ireland's Ryanair Holdings Plc, Europe's largest no-frills carrier, lured 4.4 million customers but with 72% of capacity filled.
Smaller Wizz Air Holdings Plc, the low-cost leader in Eastern Europe, has been faster in building up its schedule and carried 1.8 million passengers with a lower load factor of 60.5%.
Roeska said EasyJet's steadier approach may reflect either lower demand on the routes it serves, which have a higher mix of business passengers, or more caution on the part of management. The carrier said it's undertaking only profitable flights, rather than slashing fares to fill planes.
Spanish Flareup
The threat from flareups in the virus was reinforced Monday when booking agent Hays Travel Ltd. said it would cut up to 878 jobs, or 20% of its workforce, after the U.K. move to curb Spanish visits triggered the cancellation of hundreds of thousands of holidays.
The retreat comes less than a year after Hays quadrupled its footprint with the purchase of 555 shops from failed tour operator Thomas Cook Group Plc.
Lundgren said on a media call that the 14-day quarantine for arrivals from Spain will most likely push people to visit alternative sunspots, while adding that there's little visibility into demand beyond September.
EasyJet posted just 7 million pounds ($9.2 million) in revenue for the fiscal third quarter ending June 30, down from 1.76 billion pounds a year earlier, after resuming flights mid-month following a near grounding of its fleet at the height of coronavirus lockdowns.
It reported a loss of 324 million pounds versus a profit of 174 million pounds, though said the shortfall for the current quarter should be smaller.
EasyJet, which raised 419 million pounds in a share sale in June, said it's planning to sell more planes to raise about 245 million pounds, before leasing them back.
Lundgren said the carrier has made good progress in talks with the Unite union representing cabin crew as it seeks to cut up to 30% of the workforce. It's also working “constructively” with the Balpa labor group on a reduction in pilot numbers with Balpa, he said.
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