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* EasyJet asks for government help
* UK says in discussions on helping industry
* EasyJet could ground majority of fleet
* IAG to cut 75% of capacity
* Shares slump
By Sarah Young
LONDON, March 16 (Reuters) - The owner of British Airways
and easyJet, Europe's no.3 and no.4 airlines, warned aircraft
would be grounded on an unprecedented scale in a battle to
survive the coronavirus, but while easyJet said state aid was
needed, BA's owner talked of self-help.
Britain's government said it would discuss how to protect
the industry from the coronavirus pandemic after easyJet on
Monday joined Virgin Atlantic in calling for government help as
people across the world stop travelling.
"European aviation faces a precarious future and it is clear
that coordinated government backing will be required to ensure
the industry survives," easyJet's CEO, Johan Lundgren, said in a
statement.
BA-owner IAG did not ask for government aid,
however. IAG CEO Willie Walsh, who on Monday deferred his
retirement due to the crisis, has long opposed any government
aid and told investors that airlines should look at self-help
first.
"I think individual airlines have been approaching
governments looking for state aid. We have not done so," he
said, adding that the group would however accept any general
facilities provided to all companies which would benefit
employees.
Shares in both airlines dived in morning trading. IAG, which
also owns Spain's Iberia and Vueling carriers and Aer Lingus,
was down 23%, its lowest level since 2013, while easyJet lost
18%, its lowest level since 2012.
EasyJet, which is in regular contact with the UK government,
said it wanted governments to provide access to finance to help
overcome any short-term liquidity crunches, plus a removal of
passenger taxes, a holiday from air traffic charges as well as
an extension of the relaxation of a rule in relation to airport
slots.
GROUNDED
IAG said it would cut its flying capacity by at least 75% in
April and May, while easyJet said it could ground the
majority of its fleet on a rolling basis. The airlines are the
no.3 and no.4 European carriers on a passenger number basis.
Both airlines said they had strong balance sheets and
Citibank research showed that easyJet and IAG would still have
much lower net debt to EBITDA ratios than Air France-KLM
and Lufthansa after a simulated three-month
shutdown.
IAG said it had total liquidity of 9.3 billion euros, while
easyJet said it had 1.6 billion pounds of cash plus an undrawn
$500 million revolving credit facility.
"IAG has substantial resources to weather the storm," said
Bernstein analyst Daniel Roeska.
Both airlines said they could not provide profit guidance
for their current financial years. IAG also detailed cost cuts
including a freeze on discretionary spending, working hours
reductions and a temporary suspension of employment contracts.
Walsh also told investors that 2021 capacity was likely to
be lower than currently planned, and that the crisis would
accelerate the permanent retirement of dozens of aircraft
including BA's 747s and Iberia's A340s.
(Reporting by Sarah Young, editing by James Davey, Kate Holton;
Editing by Nick Macfie)
