28th Feb 2020 09:12
(Alliance News) - Budget airline easyJet PLC on Friday warned the coronavirus outbreak has resulted in "significant" softening of demand and load factors into and out of its northern Italian bases.
Shares in London were down 4.8% at 1,057.24 pence each in morning trade.
The London Luton Airport-based company, as a result, is planning to cancel some flights, particularly those into and out of Italy, while continuing to monitor the situation and adapting its flying programme to support demand.
"While it is too early to determine what the impact of the COVID-19 outbreak will be on current year outlook and guidance for both the Airline and Holidays business, we continue to monitor the situation carefully and will update the market in due course," FTSE-100-listed easyJet said.
To mitigate the impact from the coronavirus outbreak, the company plans to cut its administrative budget, freeze employee pay and promotions, postpone non-critical projects and reallocate aircraft offering highest revenue opportunities for summer 2020.
Separately, rival and British Airways parent International Consolidated Airlines Group SA also warned on demand due to the spread of coronavirus.
In its annual results, IAG said it is currently experiencing demand weakness on Asian and European routes and a weakening of business travel across its network due to cancellation of industry events and corporate travel restriction.
"In Asia, flights to mainland China have been suspended. On January 29, British Airways suspended its daily flight to both Beijing and Shanghai and Iberia suspended its three times weekly service to Shanghai on January 31. In addition, some services on other Asian routes have been reduced. From February 13, British Airways reduced its daily Hong Kong service from two to one. From March 13, it will reduce its daily service to Seoul to 3-4 times weekly," IAG added.
IAG also saw a drop in capacity on Italian routes in March "through a combination of cancellations and change of aircraft gauge", with more capacity reductions to be made in Italy "over the coming days" as well as across its short haul network.
IAG - which also owns Spanish carriers Iberia and Vueling, Level in Austria, and Irish airline Aer Lingus - reported a EUR2.28 billion pretax profit for 2019, down 35% from EUR3.49 billion the year before. Revenue was 5.0% higher at EUR22.47 billion.
Shares in IAG were down 9.4% at 466.50p each in London.
By Tapan Panchal; [email protected]
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