Posted on Mar 30, 2020
British budget airline easyJet has grounded its entire fleet of 344 planes and is laying off its 4,000 UK-based cabin crew for two months as of April 1st. The airline has no clear idea as to when it might resume flights.
The global crisis has brought European air travel to a standstill, leaving airlines with no revenue and facing a struggle for survival. Virgin Atlantic has already requested state aid, asking for a package of commercial loans and guarantees worth hundreds of millions of pounds, according to the Financial Times, and small British airline Loganair 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 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.
The airline said grounding its fleet removed significant costs and that it was continuing to talk to UK pilots union BALPA over a potential deal with pilots.
“We are working tirelessly to ensure that easyJet continues to be well positioned to overcome the challenges of coronavirus,” easyJet CEO Johan Lundgren said in a statement.
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