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* EasyJet under pressure from founder over Airbus order
* Virgin Atlantic seeks emergency financial help - source
* BA owner IAG extends credit facility
(Adds details on Virgin Atlantic, Airbus background)
By Sarah Young
LONDON, March 30 (Reuters) - Britain's EasyJet has
grounded its fleet of 344 planes and has no clear idea when it
might resume flights, the company said on Monday, in another
sign of the strain on airlines battling to survive the
coronavirus pandemic.
EasyJet said it would lay off its 4,000 UK-based cabin crew
for two months, meaning they won't work from April 1 but will
get 80% of their average pay under a state job retention scheme.
The global health crisis has brought European air travel to
a standstill. Small British airline Loganair said on Monday it
would seek state aid while Richard Branson's Virgin Atlantic has
asked for emergency help, a source told Reuters.
Shares in easyJet lost as much as 10% in early trading on
Monday, having halved in value over the last month. The airline
now has a market capitalisation of about 2.3 billion pounds
($2.9 billion). Its shares were down 8% at 1145 GMT.
"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," said Hargreaves Landsdown analyst William Ryder.
EasyJet was also under pressure from its founder, Stelios
Haji-Ioannou, who asked in a letter on Sunday for it to cancel
or renegotiate a 4.5 billion pound order for 107 Airbus planes
because the extra aircraft would destroy shareholder value.
Haji-Ioannou, who along with his family owns about a third
of easyJet's shares, has been a long-time critic of the
airline's plans, saying it was putting expansion before profit
growth.
EasyJet said it was trying to reduce payments, including
those on aircraft, and would respond to the letter privately. It
has said many times that its arrangement with Airbus gives it a
great deal of flexibility.
Airbus played down any possibility of cancelling
the easyJet contract. "Any order that appears on our table is
audited and is firm," an Airbus spokesman said.
Industry sources, however, said there were likely to be
talks with easyJet and other airlines about delaying deliveries.
STATE AID
EasyJet said it was focused on short-term liquidity -
including removing costs from the business and working with
suppliers to defer and reduce payments - and was also in talks
with UK pilots union BALPA over a potential deal.
"We are working tirelessly to ensure that easyJet continues
to be well positioned to overcome the challenges of
coronavirus," easyJet CEO Johan Lundgren said in a statement.
Haji-Ioannou has told the airline to try to raise money from
shareholders, and offered to participate himself.
Some UK airlines had been hoping for a specific state aid
package but the government said last week it would only consider
stepping in on an individual basis once carriers had exhausted
all options, such as raising capital from existing investors.
Virgin Atlantic has asked the government for emergency
financial help, a source told Reuters on Monday. It was not
clear if this would be in the shape of commercial loans or
guarantees, or the government taking a stake.
Virgin is 51% owned by billionaire Richard Branson's Virgin
group and 49% by U.S. airline Delta. Delta might prefer
not to invest more in Virgin now, given that it is in line for
U.S. grants as part of a relief package there.
EasyJet said it had no plans to ask for any bespoke state
support and was focused on using government measures already
announced. British Airways-owner IAG said in a
statement it had extended a revolving credit facility and was
looking at measures to improve its cash flow and liquidity.
EasyJet's management could face disruption if it does not
address Haji-Ioannou's worries over the Airbus order, which is
due to be paid between 2020 and 2023, as he has threatened
rolling general meetings to try to remove board members.
($1 = 0.8076 pounds)
(Reporting by Sarah Young; additional reporting by Tim Hepher,
Editing by James Davey and David Clarke)
