* Presents new fleet plan with built-in flexibility
* Company has notional cash balance of 3.3 bln stg
* Would seek extra funding if shutdown extends beyond 9
months
* Refrains from issuing 2020 results guidance
* Shares up 2%
(Adds shareholder statement, updates shares, paragraphs 11, 18)
By Sarah Young
LONDON, April 16 (Reuters) - EasyJet can survive a
nine-month shutdown thanks to its measures to contend with the
coronavirus crisis and is planning for a slow recovery, the
British airline said on Thursday.
As airlines worldwide battle for survival after lockdowns
and travel bans brought the sector to a virtual standstill,
EasyJet announced a new fleet plan to manage its emergence from
the enforced hibernation.
The UK-based company said it will start to shrink its fleet
and the number of planes it operates will not reach pre-crisis
levels until 2022, signalling that it does not expect a quick
recovery for the industry.
"We've been able to adapt ourselves to reduced demand for
the next couple of years, then have the flexibility to increase
as demand picks up again," Chief Executive Johan Lundgren told
reporters.
The industry is split on how quickly the sector can recover.
Lufthansa, plane manufacturers and airline body IATA
have warned that it will be a slow process. EasyJet's bigger
low-cost rival Ryanair, meanwhile, has predicted a swift
rebound in traffic.
Lundgren said that, while he does not expect the grounding
of easyJet's fleet to last nine months, the company would remain
cash-positive even if that were the case and could survive for
longer than that by seeking additional funding.
Among the steps it is taking, easyJet is in talks over the
sale and leaseback of some planes to leasing companies, with
expected proceeds of up to 550 million pounds ($687 million).
"Overall, the company has presented a very credible response
to the crisis," said Goodbody analyst Mark Simpson.
In addition to the deferral of new orders and non-renewal of
leases, easyJet said it now plans to sell six aircraft.
The airline, however, has faced calls from its founder and
biggest shareholder, Stelios Haji-Ioannou, to terminate its 4.5
billion pound order with Airbus for 107 new jets.
He escalated his row with management on Thursday, issuing a
statement saying he planned to call for the removal of Lundgren
as well as chairman John Barton at forthcoming meetings. He said
Lundgren should not send money to Airbus for planes while
running an "aircraft parking lot".
CASH PILE
Through various funding initiatives, easyJet expects to
generate total additional liquidity of about 1.85 billion to
1.95 billion pounds, leading to a notional cash balance of about
3.3 billion pounds.
Given the level of continued market uncertainty, the company
said it is not possible to provide guidance for the remainder of
the 2020 financial year.
However, it said winter bookings are well ahead of those at
the same stage last year, with Lundgren adding that he expects
there to be pent-up demand for holidays as people emerge from
lockdown.
But travel restrictions are likely to ease slowly and
easyJet will have to be flexible, the CEO said. "I don't think
this is going to be a case of let's just open everything up," he
added.
Measures under consideration include disinfecting aircraft
and steps to ensure social distancing on planes.
"We will clearly look to have the middle seat empty as we
start," Lundgren said. "I think that is actually what the
customers would like to see."
EasyJet shares were up 2.2% at 616 pence at 1207 GMT, having
lost more than 50% year to date.
($1 = 0.8007 pounds)
(Reporting by Sarah Young
Editing by Kate Holton and David Goodman)
easyJet (EZJ)