EasyJet, one of Europe’s biggest low cost airline grounds its entire fleet
EasyJet one of Europe’s largest low-cost airline has grounded its entire fleet. The company has said it won’t be able to give the exact date of commencement of operations again. This comes mainly due to the coronavirus which has led to airlines cancelling flights and grounding of their aircraft due to low travel demand. Countries all over the world have imposed travel restrictions and bans which have affected operation of flights.
Grounding of its fleet
EasyJet, a low-cost airline based in London-Luton Airport has grounded its fleet of 331 planes. EasyJet serves around 159 airports and flies 1,051 routes on a normal day. The date of commencement of operation has not been announced yet. The airline said it has reached an agreement with Unite the union on furlough arrangements for its cabin crew, with means its crew will be paid 80% of their wage from 1 April through the government’s job retention scheme for a period of two months.
Easyjet CEO Johan Lundgren in a statement 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.”
The airline has also said it does not know when operations would be restarted. If and when they do it will only be after careful evaluation of the regulation of the government and demand of the market. EasyJet also said it would be operating emergency services if needed.
Financial position of the airline
According to the airline they maintain a strong balance sheet, with no debt re-financings due until 2022. But recent developments state that their founder Sir Haji-Ioannou is against Easyjet’s placement of aircraft order at Airbus.
According to its founder even if commercial operations begin, the revenue it generates will be too low for the airline to keep running and that they shouldn’t buy more aircrafts at this time. Easyjet has placed an order of 107 aircrafts worth £4.5 billion.
Fellow Brit Airlines
EasyJet is not the only airline to ground its entire fleet and suspend operations.
Flybe was one of the first fatalities of coronavirus as the largest regional airline in Europe suspended operations and filed for bankruptcy.
Its national carrier British Airways has grounded most of its fleet with its CEO warning of job cuts and massive reduction like never seen before. London City airport has been closed and British Airways has shifted its operation to Terminal-5 citing low travel demand for flights and has moved all operations under one roof as a cost cutting measure.
Ryan Air, another low cost airline based in the UK has grounded 90% of its fleet and is currently operating key routes until demand lasts. Europe’s largest low-cost carrier has also cut 50% of its workforce.
Jet2, a holiday and a charter airline has ceased operations and has currently grounded all its aircraft. Recently we had reported how Jet2 has turned all its aircraft mid-air heading to Spain back to the UK.
With the crisis looming large, demand has plummeted to an extent where all flights except emergency and cargo will be operational. An airline with the size of EasyJet will have to rely on its cash reserves until the situation stems to normalcy. Sooner the better as cash reserves are not meant to last.