(Adds shareholder detail, share price, background)
By Sarah Young
LONDON, March 30 (Reuters) - British budget airline easyJet
has grounded its fleet of 344 planes and has no clear
idea when it might resume flights, it said on Monday,
highlighting the strain on airlines trying 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, leaving airlines with no revenue and facing a
struggle for survival. Small British airline Loganair, for
example, said on Monday that it would seek state support.
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 5% at 0937 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 under additional pressure from its biggest
shareholder, Stelios Haji-Ioannou, who along with his family
owns about a third of its shares.
In a letter to easyJet's chairman on Sunday, Haji-Ioannou
said it must cancel or renegotiate a 4.5 billion pound order for
107 Airbus planes because the extra aircraft would just destroy
shareholder value.
EasyJet said it was trying to reduce payments, including
those on aircraft, and would respond to the letter privately.
The airline said it was focused on short-term liquidity,
including removing costs from the business and working with
suppliers to defer and reduce payments where possible.
It said grounding its fleet removed significant costs and
that it was continuing to talk to UK pilots union BALPA over a
potential deal with pilots.
"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.
HELP NEEDED
Haji-Ioannou has told the airline to try to raise money from
shareholders, and offered to participate himself.
Management could face disruption if it does not address his
worries over the Airbus order, which is due to be paid between
2020 and 2023, as he has threatened a rolling general meetings
to try to remove board members.
For easyJet cabin crew looking for something to do,
Britain's National Health Service has asked them to volunteer at
hospitals being set up to cope with the thousands of coronavirus
patients expected in the coming weeks. Crew have first aid
training and security clearance, making them ideal candidates.
EasyJet said it was focused on using UK government measures
already announced to help its finances during the coronavirus
crisis and has no plans to ask for any bespoke support.
Some UK airlines had been hoping for a specific state aid
package but the government said last week it would only consider
stepping in once carriers had exhausted all other options, such
as raising capital from existing investors.
On Monday, small regional British airline Loganair, which
flies between remote Scottish islands and the mainland, said it
was planning to ask the government for support, having already
asked its owners for help.
"I do think that like the vast majority of UK airlines we
will be going back to take up that invite for further
conversation with the Treasury in the coming days because we
have to," Loganair CEO Jonathan Hinkles told BBC radio.
Virgin Atlantic has already requested state aid, asking for
a package of commercial loans and guarantees worth hundreds of
millions of pounds, according to the Financial Times.
($1 = 0.8076 pounds)
(Reporting by Sarah Young; Editing by James Davey and David
Clarke)
easyJet (EZJ)
