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Airline easyJet said it is already seeing some impact on demand from the new Omicron variant of coronavirus as it revealed annual losses of more than £1 billion.
The low-cost carrier said it has seen signs that demand is softening in its current quarter due to the emergence of the new strain of Covid-19, with winter bookings starting to weaken and some travellers transferring trips to early next year.
City destinations in particular have been affected, according to the group.
But chief executive Johan Lundgren said the impact so far is not on the level seen previously when restrictions were imposed, although he stressed it is “too soon to say” what the ultimate hit will be.
New restrictions came into force on Tuesday in an effort to control the new variant, with the Government ruling that all travellers returning to the UK must now take a PCR test and self-isolate until they receive a negative result.
Many countries have also moved to tighten their borders, with the UK Government announcing a ban on travel from 10 countries in southern Africa where the variant is thought to be in circulation, and restrictions are growing across Europe.
EasyJet said: “It’s too soon to say what impact Omicron may have on European travel and any further short-term restrictions that may result.
“However, we have prepared ourselves for periods of uncertainty such as this.”
The comments came as the company posted statutory pre-tax losses of £1.04 billion for the year to September 30, compared with losses of £1.27 billion the previous year, which was the first full-year loss in its 25-year history.
On an underlying basis, pre-tax losses widened from £835 million to £1.14 billion.
Despite the current uncertainty, easyJet said it is still hopeful of a recovery to pre-pandemic levels of trading over its current year.
The group said it expects to ramp up its flights programme to around 65% of pre-pandemic levels in the current quarter to the end of December, although this has been reined in from a previous target of 70%.
It aims to increase this to 70% in the three months to March, with a return to around 2019 levels in the summer quarter.
It also said it has seen demand accelerate recently, with a “strong performance” for October half-term, the ski season and Christmas.
But easyJet held off from giving full financial guidance for the year, given the “continued level of short-term uncertainty”.
Mr Lundgren said: “We have seen an encouraging start to this year, with strong demand returning for peak winter holiday periods coupled with increasing summer demand, with fourth-quarter capacity expected to be close to full-year 2019 levels.”
He added: “We remain mindful that many uncertainties remain as we navigate the winter, but we see a unique opportunity for easyJet to win customers and take market share from rivals in this period.”
Mr Lundgren questioned the Government’s move to introduce PCR testing for all travellers regardless of destination.
“There’s still a big question mark around why we have introduced blanket PCR testing when we are bringing in people from countries where they have no recorded cases whatsoever,” he said.
“It means that, once again, the UK Government is an outlier.”
Airline expert Gerald Khoo at Liberum said while it is unclear what impact Omicron will have on the industry, “easyJet has the balance sheet strength to deal with such a challenge”.