Planes likely to be grounded
Easyjet warns European airlines ‘may not survive’
Planes may be grounded for some time (pic: Terry Murden)
Easyjet today said there is no guarantee that European airlines will survive what could be a long-term travel freeze.
It has announced ‘significant cancellations’ of flights and said it is removing cost and ‘non-critical’ expenditure to mitigate the impact of coronavirus. BA has also announced a sharp cut to flights.
Easyjet said it has a strong balance sheet and an undrawn revolving credit facility.
But cuts in flights will continue on a rolling basis for the foreseeable future and could result in the grounding of the majority of the easyJet fleet.
It said it will continue to operate rescue flights for short periods “where we can”, in order to repatriate customers.
“To help mitigate the impact from COVID-19 we are taking every action to remove cost and non-critical expenditure from the business at every level. Aircraft groundings will remove significant levels of variable costs,” it said in a statement.
“EasyJet maintains a strong balance sheet including a £1.6bn cash balance, an undrawn $500m Revolving Credit Facility, unencumbered aircraft worth in excess of £4bn and a large and valuable slot portfolio.
“EasyJet has no debt re-financings due until 2022 and is in ongoing discussions with liquidity providers who recognise our strength of balance sheet and business model.
“European aviation faces a precarious future and there is no guarantee that the European airlines, along with all the benefits it brings for people, the economy and business, will survive what could be a long-term travel freeze and the risks of a slow recovery.
“Whether it does or not will depend significantly on European airlines maintaining access to liquidity, including that enabled by governments across Europe.
“EasyJet continues to work closely with the authorities and is following the guidelines provided by the World Health Organisation and EASA to ensure the health and wellbeing of our people and customers.”
We are doing everything in our power to rise to the challengesJohn Lundgren, Easyjet
At this stage, given the level of continued uncertainty, the company said it “is not possible to provide financial guidance for the remainder of the FY20 financial year.”
Johan Lundgren, easyJet CEO said: “At easyJet we are doing everything in our power to rise to the challenges of the coronavirus so that we can continue to provide the benefits that aviation brings to people, the economy and business.
“We continue to operate rescue and repatriation flights to get people home where we can, so they can be with family and friends in these difficult times.
“European aviation faces a precarious future and it is clear that coordinated government backing will be required to ensure the industry survives and is able to continue to operate when the crisis is over.”
International Airlines Group, which owns British Airways says it has slashed the number of seats available by 75% for April and May.
Willie Walsh, who was due to stand down as IAG boss this month, will remain in his role to deal with the crisis.
“To date IAG has suspended flights to China, reduced capacity on Asian routes, cancelled all flights to, from and within Italy and made various changes to our network,” the group said in a statement to the London Stock Exchange.
It said President Trump’s decision to ban European travellers from the US had “added to the uncertainty on North Atlantic routes”.