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EasyJet on Monday said it has grounded its entire fleet of 331 planes and said it cannot give a date for when it would restart commercial flights, as it struggles to cope with “unprecedented travel restrictions” imposed by governments globally due to the coronavirus pandemic.
Luton-based easyJet EZJ, -7.63% said the measure “removes significant cost” and said that it had reached an agreement with trade union Unite to furlough its U.K. cabin crew. That means staff will receive 80% of average pay, funded by the U.K. government’s Coronavirus Job Retention Scheme.
The no-frills airline said it maintains a strong balance sheet, with no debt refinancings due until 2022. “We are in ongoing discussions with liquidity providers who recognize our strength of balance sheet and business model.”
William Ryder, equity analyst at Hargreaves Lansdown, said that while easyJet isn’t flying any planes and most of its staff members have been furloughed, management will have a reasonable idea of what costs will be each week from here on out.
“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,” Ryder said.
Meanwhile, airlines are encouraging thousands of their furloughed staff to help in temporary hospitals that are being built to cope with the anticipated wave of coronavirus patients.
Easyjet has written to 9,000 of its U.K.-based staff, around half of whom are first-aid trained in cardiopulmonary resuscitation, to volunteer for further training before helping out at the new National Health Service Nightingale Hospital in east London. Virgin Atlantic, which is cutting up to 85% with most of the cancellations in effect by the end of March, said it would contact 4,000 of its staff who may have the relevant skills needed to provide help.
Airlines have called for additional support measures from the government as their revenues have been hard-hit as countries shut their borders and order their citizens to stay at home to help contain the spread of the virus.
On Monday, regional U.K. carrier Loganair, which flies between the Scottish islands and the mainland, said it would approach the government for financial help this week.
“The COVID-19 pandemic has had an enormous effect on all U.K. airlines. The Government has made it clear that it is open to requests for support from individual airlines and whilst Loganair hasn’t yet taken up this invite, we expect to join other U.K. airlines in doing so in the coming days,” Chief Executive Jonathan Hinkles said.
Last week, Britain’s chancellor Rishi Sunak warned the aviation industry that the government would only step in as “a last resort” and urged airlines to try to raise money from shareholders. Sunak said the state would only enter into negotiations with individual carriers once they had “exhausted other options.”
Airlines globally are being pushed into emergency cost-cutting measures to protect profits, including parking flights, cutting routes and implementing hiring freezes. Ryanair RYA, -0.95% has also grounded most of its fleet, while British Airways-owner IAG IAG, -3.64% has slashed capacity by 75% for April to May compared with the same period in 2019.
Shares in Ryanair were trading down 8.08% at 11:15 GMT, while IAG shares were 5.29% lower.
The International Air Transport Association (IATA), which represents 290 airlines around the world, has warned of an “apocalypse” in the sector as it called on governments around the world for help. IATA said annual revenues from global ticket sales would fall by $252 billion this year, a drop of 44% compared with last year.
On Sunday, almost 40 cross-party Members of Parliament wrote to Sunak calling for more support for the U.K. aviation industry to deal with the impacts of COVID-19.
“Airlines, airports, air navigation service providers, travel retailers and ground handlers have made clear to Government the support they need. We believe the Government should review these measures urgently, to safeguard jobs and the U.K.’s international competitiveness as an aviation hub,” the letter said.
