EasyJet grounds fleet as pandemic pushes airlines to the brink
LONDON: British budget airline easyJet (EZJ.L) has grounded its fleet of 344 planes and has no clear idea when it might resume flights, it said on Monday, highlighting the strain on airlines trying to survive the coronavirus pandemic.
EasyJet said it would lay off its 4,000 UK-based cabin crew for two months, meaning they won’t work from April 1 but will get 80% of their average pay under a state job retention scheme.
The global health crisis has brought European air travel to a standstill, leaving airlines with no revenue and facing a struggle for survival. Small British airline Loganair, for example, said on Monday that it would seek state support.
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% 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.
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. – Reuters