EasyJet

EasyJet grounds fleet as pandemic pushes airlines to the brink

British low cost airline easyJet said it had grounded its entire fleet of over 330 aircraft and had no visibility on when it could restart flights, highlighting the heavy strain on airlines trying to survive to fly again after coronavirus.

EasyJet also said on Monday (March 30) that it would furlough its 4,000 UK-based cabin crew for two months, meaning they will not work from April 1 but will be paid 80 per cent of their average pay under a government job retention scheme.

The health emergency has brought European air travel to a standstill, meaning airlines have no revenues and face a battle to survive.

Some UK airlines had been hoping for an airline specific state aid package but Britain told them last week that it will only consider stepping in once they had exhausted all other possible options, such as raising capital from existing investors.

“We think the group has enough liquidity to manage a short suspension of European air travel but if the disruption proves prolonged, or the recovery is sluggish, easyJet could be in real trouble,” said Hargreaves Landsdown analyst William Ryder.

EasyJet was under additional pressure from its biggest shareholder, Stelios Haji-Ioannou, who along with his family owns about a third of its shares.

In a letter to easyJet’s chairman on Sunday, Haji-Ioannou said it must cancel or renegotiate a 4.5 billion pound order for 107 Airbus planes because the extra aircraft would just destroy shareholder value.

EasyJet said it was trying to reduce payments, including those on aircraft, and would respond to the letter privately.

Haji-Ioannou has told the airline to try to raise money from shareholders, and offered to participate himself.

Management could face disruption if it does not address his worries over the Airbus order, which is due to be paid between 2020 and 2023, as he has threatened a rolling general meetings to try to remove board members.

For easyJet cabin crew looking for something to do, Britain’s National Health Service has asked them to volunteer at hospitals being set up to cope with the thousands of coronavirus patients expected in the coming weeks. Crew have first aid training and security clearance, making them ideal candidates.

EasyJet said it was focused on using UK government measures already announced to help its finances during the coronavirus crisis and has no plans to ask for any bespoke support.

“I do think that like the vast majority of UK airlines we will be going back to take up that invite for further conversation with the Treasury in the coming days because we have to,” Loganair Chief Executive Jonathan Hinkles told BBC radio.

Shares in easyJet lost as much as 10% in early trading on Monday, having halved in value over the last month. The airline now has a market capitalisation of about 2.3 billion pounds ($2.9 billion). Its shares were down 5 percent at 0937 GMT.

“We think the group has enough liquidity to manage a short suspension of European air travel but if the disruption proves prolonged, or the recovery is sluggish, easyJet could be in real trouble,” said Hargreaves Landsdown analyst William Ryder.