EasyJet has announced plans to lay off almost one in three of its staff in the face of what the chief executive calls “the worst crisis” the airline industry has ever faced.
EasyJet resumes flights on June 15 but only within the UK, within France and within Italy. Johan Lundgren, the CEO, says that between July and September the airline hopes to operate 30 per cent of its pre-crisis timetable.
Lundgren assumes that demand for air travel won’t return to 2019 levels until 2023 and he is shrinking the airline accordingly.
EasyJet is retiring or selling 41 of its 343 aircraft. Up to 30 per cent of its 15,000 staff will be made redundant. The airline employs 8,000 people in the UK, 7,000 of them are currently furloughed as part of the UK government’s Job Retention Scheme.
The airline will operate fewer flights and fewer routes and is in talks with airports about cutting costs. While it intends to retain its “leadership position in primary airports” like Gatwick, there are “no guarantees” it won’t withdraw from smaller UK bases like Bristol, Manchester, Liverpool, Belfast, Edinburgh, Newcastle, Stansted and Southend.
EasyJet is receiving received millions of pounds from the taxpayer to help met the cost of salaries but Lundgren says the business is still burning through between £30 and £40 million a week, a situation that he says is unlikely to change in the short-term.
Lundgren told journalists that the financial support from the government gave the airline “an important opportunity to assess the situation” but that the airline needed to “take responsibility for the new environment” and “not use taxpayers money”.
He wouldn’t say what proportion of the job cuts would impact staff in the UK.
As well as cutting costs, EasyJet is borrowing money. It has raised £400m, secured against its fleet, and a further £600m via the Bank of England’s Covid Corporate Financing Facility. It is hoping to raise up to £650m by selling and leasing back six of its aircraft (EasyJet owns around 70 per cent of its fleet).
The government’s plan to quarantine everyone arriving in the UK for 14 days from June 8 has not influenced the number of people EasyJet is letting go but it could significantly impact flight bookings this summer.
Lundgren says he “doesn’t understand” the rational behind the rules and plans to lobby for “air bridges” to popular holiday destinations to be in place by the end of June.
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