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EasyJet to Slash up to 4,500 Jobs Following Coronavirus Impact
In a trading statement on capacity, fleet & cost structure plans released on Thursday, European low-cost airline easyJet announced that it will look to reduce at least 30 percent of its 15,000 employees in an attempt to battle the financial challenges caused by coronavirus pandemic.
The boss of easyJet, CEO Johan Lundgren, said, “We realize that these are very difficult times and we are having to consider very difficult decisions which will impact our people, but we want to protect as many jobs as we can for the long-term. We remain focused on doing what is right for the company and its long-term health and success, following the swift action we have taken over the last three months to meet the challenges of the virus. Although we will restart flying on 15 June, we expect demand to build slowly, only returning to 2019 levels in about three years’ time.”
He continued, “Against this backdrop, we are planning to reduce the size of our fleet and to optimize the network and our bases. As a result, we anticipate reducing staff numbers by up to 30% across the business and we will continue to remove cost and non-critical expenditure at every level. We will be launching an employee consultation over the coming days.
Although the news comes as no real surprise when looking at the plans of other airlines, easyJet had held off from making the announcement as only six days ago did the shareholders hold a vote on the top brass of the company, which for the past few weeks sent out internal memos to company employees asking them to vote to keep their jobs. This general meeting took place last week after the former owner of the airline attempted to remove the CEO, CFO and chairman over an Airbus order contract. Sir Stelios Haji-Ioannou’s plans were defeated by the shareholder vote, of which many of the company employees took part in.
easyJet states it expects its fleet size to be at around 302 aircraft by the end of 2021, which is 51 aircraft lower than the anticipated fleet size which was reported to the market prior to COVID-19 pandemic. This fleet number will include approximately 3-4% of un-crewed standby aircraft during peak. The reduction in fleet size will be achieved through the measures previously announced, including the deferral of new aircraft deliveries and the re-delivery of leased aircraft. According to the company’s chief executive, Johan Lundgren, pilots and flight attendants are likely to be most affected by the cuts because their jobs depend directly on the number of aircraft.
The airline which has three AOCs in The United Kingdom, Europe and Switzerland, justified the job cuts with the slump in air traffic as a result of the coronavirus pandemic and their expectation that the demand for air travel will not return to the level of 2019 before 2023.
“Indeed, easyJet’s own projections, though on the pessimistic side, point to recovery by 2023 so this is a temporary problem that doesn’t need this ill-considered knee-jerk reaction.” chief of the airline said.
“This is still the worst crisis that this industry has ever been faced with. There’s a huge amount of uncertainty going forward. Given easyJet is a British company, the United Kingdom is its strongest market and it has had hundreds of millions in support from the U.K. taxpayer, I can safely say that we will need a lot of convincing that easyJet needs to make such dramatic cuts” he added.
easyJet stopped flight operations completely and grounded its fleet at the end of March due to the flight restrictions and lockdowns. The company previously announced that it would restart a small number of mainly domestic flights from June 15 with a new range of additional measures in place including the mandatory wearing of face masks.
To minimize the risk of infection customers, cabin and ground crew will be required to wear masks and there will also initially be no food service onboard flights, all of which operate on a short-haul network. The airline expects to increase flights as customer demand continues to build and pandemic-related restrictions are relaxed.
In a bid to ensure its liquidity, the company secured a £600 million ($737 million) loan from the Treasury and Bank of England’s COVID Corporate Financing Facility as well as 500 US million dollars Revolving Credit Facility and two-term loans totaling £400 million ($493 million).
The budget airline also plans to make sell and leaseback agreements with lessors that are interested in purchasing the airline’s aircraft. The company anticipates that it will raise £500-£650 million (approximately 616-800 million US dollars) with sale and leaseback deals. The airline expects that it will generate total additional liquidity of approximately £2 billion (approximately 2,5 billion US dollars) upon closure of all these funding initiatives.
Like other airlines, easyJet is concerned about a UK regulation that will apply from 8 June. Those who come from abroad by plane must go to a 14-day quarantine in Great Britain according to the regulation. Given the easing in many other countries, Mr. Lundgren does not understand the purpose of this regulation.
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