EasyJet and Heathrow hit by huge losses amid air travel chaos

Air travel chaos has triggered hundreds of millions of pounds of losses for easyJet and Heathrow Airport, denting their return from Covid despite a huge surge in demand.

The budget airline revealed quarterly losses after taking a £133m hit from recent airport disruption, but insisted its operations are getting back to normal following cancellations and cuts to schedules.

It reported a group headline loss before tax of £114m for the three months to June 30, blaming “widespread operational challenges” and flight cancellations due to staff shortages at airports.

It was an improvement on the £318m loss seen a year ago – but the airline remains in the red despite passenger numbers jumping more than sevenfold to 22 million in the quarter.

Meanwhile Heathrow’s adjusted loss before tax during the first six months of the year was £321m, down from £787m during the same period in 2021.

The improvement was due to an extraordinary spike in passenger numbers, from 3.9 million to 26.1 million, and to increased fees paid by airlines and their customers.

Chief executive John Holland-Kaye described comments by Ryanair chief financial officer Neil Sorahan which blamed airports for not recruiting enough staff as “ridiculous”.

He said: “They were blaming airports for not having enough ground handling staff. Ground handling is the responsibility of the airline. So that’s like them blaming us because they haven’t got enough pilots. They need to take responsibility for their ground handling.”

The number of ground handlers – security-cleared workers who safely maintain, park, clean, refuel and cater aircraft – is currently at 70 per cent of pre-Covid levels, he said.

However, he admitted that “airports need to catch up on underinvestment during the Covid years – at Heathrow, that means replacing the Terminal 2 baggage system and new security lanes”.

EasyJet boss Johan Lundgren said its summer operations had now “normalised” and were “much improved” in July.

He said the group had flown around 5,000 flights in recent days with no further cancellations in the UK since the start of the English school summer holidays.

The carrier said it remains focused on ensuring “smooth operations this summer” and will continue to “fine tune” its schedule, signalling further flight cuts if needed.

It comes after airports such as Heathrow and Gatwick told airlines to cut their flight schedules following scenes of chaos as staff shortages left them struggling to cope with the sudden ramping up of demand for overseas holidays.

Holidaymakers have suffered flight delays and cancellations, alongside lengthy queues as airports have struggled with baggage handling, air traffic control and security.

Mr Lundgren declined to comment on whether the group was pursuing compensation from the airports for recent disruption, but said “that’s clearly something that we’ll be discussing individually with our operators and partners”.

He said it was “meaningless to start pointing fingers” at where the blame lies, saying he believed it was better the airports demanded flights were cut in advance rather than having to take action at the last minute.

He said easyJet was also to blame for not having enough staff on board, especially for the Easter and Queen’s jubilee getaway.

But Mr Lundgren added: “We have taken action to build the additional resilience needed this summer and the operation has now normalised.

“Despite the loss this quarter due to the short-term disruption issues, the return to flying at scale has demonstrated that the strategic initiatives launched during the pandemic are delivering now and with more to come.”

The group ran 87 per cent of its pre-pandemic flight schedule in its third quarter to June 30 and expects this to edge up to around 90 per cent in its key summer quarter, though this is held back by the airport caps.

It stressed it expects the disruption to be a “one-off this summer”, with schedules and airport operations set to return to normal for next year’s peak season.

But holidaymakers are facing higher ticket prices, with summer fares 13 per cent higher than the pre-pandemic comparable period as it battles to contain costs, which overall soared to £1.9bn in its third quarter.

Russ Mould, investment director at AJ Bell, said: “Problems like shortage of labour aren’t going to disappear overnight.

“For now though it does look like people have been so starved of their week on the beach they’re prepared to put up with some disruption and higher costs.

“How long that can last when household budgets are under severe pressure is open to question.”