Easyjet has grounded its entire fleet of more than 300 aircraft in the wake of “unprecedented” travel restrictions over the global coronavirus pandemic.
The budget flyer warned today “there can be no certainty of the date for restarting commercial flights”.
It has grounded its entire fleet of commercial aircraft and put its cabin crew staff on the government’s job retention scheme in a bid to survive the worldwide pandemic
Easyjet said grounding its planes would strip out “significant cost” from the airline. It, and many other flyers, are trying to survive the coronavirus fallout on the transport sector.
And it is holding ongoing discussions with lenders on accessing its liquidity.
Meanwhile, Easyjet reached an agreement with union Unite on cabin crew. They will be put on the government’s job retention scheme from 1 April, keeping 80 per cent of their salaries.
But Easyjet told investors:
At this stage there can be no certainty of the date for restarting commercial flights. We will continuously evaluate the situation based on regulations and demand, and will update the market when we have a view.
We continue to take every action to remove cost and non-critical expenditure from the business at every level in order to help mitigate the impact from the coronavirus. The grounding of aircraft removes significant cost.
Easyjet to continue rescue flights
The budget airline has committed to more rescue flights to repatriate customers currently stranded abroad over coronavirus.
Yesterday saw the airline complete its 650th rescue flight, having returned 45,000 passengers home.
“We will continue to work with government bodies to operate additional rescue flights as requested,” Easyjet added.
Johan Lundgren, Easyjet CEO, said: “I am extremely proud of the way in which people across Easyjet have given their absolute best at such a challenging time, including so many crew who have volunteered to operate rescue flights to bring our customers home.
“We are working tirelessly to ensure that Easyjet continues to be well positioned to overcome the challenges of coronavirus.”
Broker Liberum put the airline’s shares under review as a result.
Easyjet’s stock fell 2.5 per cent to 580p in early trading today. That is almost a third of the shares’ value as of 10 February, when they traded at 1,552p.
UK urged to offer airlines coronavirus support
That comes amid global disruption to the UK airline sector. Travel stocks have plunged since the coronavirus outbreak spread to Italy in February.
That prompted initial travel restrictions followed by a slump in demand among passengers. Then countries around the world instituted travel bans in a bid to curb the spread of coronavirus.
UK passenger numbers have dwindled close to zero and the travel restrictions nome cover 98 per cent of passenger revenues.
MPs yesterday urged the government to bail out airlines, with coronavirus pushing some operators to the edge.
A group of 38 MPs wrote to chancellor Rishi Sunak asking for him to “urgently review” support airlines and airports have requested.
Sunak has so far only said he would grant state aid on a case-by-case basis as a last resort.
Last week Moody’s downgraded Heathrow Airport’s credit rating over coronavirus.
Airlines face more trouble ahead
William Ryder, equity analyst at Hargreaves Lansdown, interpreted the move positively for the company, saying it will slash costs at a crucial time.
But he warned the lack of a revenue stream could hurt the airline if the coronavirus outbreak persists.
“Easyjet isn’t flying any planes and most of its staff have been furloughed, so management will have a reasonable idea of what costs will be each week from here on out,” he said.
“Unfortunately, investors don’t have this information so it’s impossible to accurately assess Easyjet’s prospects. 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.”
Joe Healey, investment research analyst at The Share Centre, said Easyjet’s dramatic decision to ground all flights is evidence the coronavirus crisis will continue to wreak havoc on UK stocks.
“It looks set to be another rocky week in markets as the toll of the virus starts to become more apparent,” he said.
“There is still too much uncertainty ahead to paint a broadly positive picture for future market direction. With businesses having to adapt to extreme circumstances – Easyjet grounding all flights, trading figures being postponed and a rapid shift to cost-cutting – it appears there are testing times ahead.”