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(Alliance News) - Moody's Investors Service on Wednesday said that new restrictions on travel across Europe will slow easyJet PLC's passenger traffic recovery in 2021.
Moody's noted that about 40% of easyJet's revenue in the year to the end of September 2019 related to the UK.
The ratings agency said, following increasing Covid infection rates across Europe, extensive travel restrictions have been put in place. Under the current restrictions travel abroad from the UK is not permitted other than for essential purposes. European countries including Spain, France and Germany are currently restricting arrivals from the UK, subject to varying exceptions relating to residence, nationality and for essential purposes.
Given the seasonally low period for travel at the start of each calendar year, Moody's said the impact of the restrictions on easyJet is likely to be relatively limited. Moody's base case projections remain that substantial improvements in passenger volumes will occur in the second half of 2021. This is based on Covid infection rates reducing from their high current levels through a combination of lockdown measures and vaccination programmes.
However, Moody's highlighted that there are substantial risks that travel volumes will remain very low over Easter and that weakness may persist into the key summer period, notably if infection rates remain high or if testing regimes are not effectively implemented.
Moody's said it does not expect passenger air traffic to recover to 2019 levels until at least 2023, and hence the focus in 2021 is primarily on cash burn and liquidity. Moody's said it estimates that easyJet's current liquidity is sufficient to absorb current levels of cash burn into early 2022.
easyJet shares closed 1.5% lower in London on Wednesday at 832.80 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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