EasyJet to cut 4,500 jobs and shrink fleet
By Sean Farrell
Date: Thursday 28 May 2020
(Sharecast News) - EasyJet plans to cut about 4,500 jobs as the airline prepares to restart flying with a smaller fleet and reduced demand as a result of the Covid-19 crisis.
The job cuts will affect up to 30% of the company's workforce of 15,000 and are the latest in a wave of redundancies to hit the airline industry. EasyJet said the cuts were required because demand for air travel would take three years to recover.
After announcing last week that it would resume flights, EasyJet said it expected to fly about 30% of capacity in its fiscal fourth quarter compared with 2019. Its fleet size at the end of the 2021 year will be about 302 aircraft - 51 planes lower than expected.
Booking trends on resumed flights are encouraging, the company said. Demand for summer is increasing from a low base and winter bookings are well ahead of a year earlier, including customers rebooking cancelled flights.
EasyJet grounded its fleet in March to save money during the Covid-19 economic lockdown. The budget carrier is planning to start flying again with much reduced capacity on 15 June but it said on Thursday that demand for air travel would not reach 2019 levels until 2023.
The job cuts at easyJet are the latest in the airline industry following British Airways announcement that up to 12,000 jobs would go and Ryanair's plans to reduce its workforce by 3,000. Flybe collapsed in March with the loss of about 2,000 jobs.
Johan Lundgren, easyJet's chief executive, said: "We realise 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."
EasyJet shares rose 5.8% to 749.60p at 09:46 BST.
The company said it would consult with workers about the job cuts. EasyJet could face union and political opposition to its actions after taking government support to pay furloughed workers and paying a £174m dividend, including £60m to founder Stelios Haji-Ioannou.
Brian Strutton, general secretary of the pilots union Balpa, said: "This is a real kick in the teeth. Given easyJet is a British company, the UK is its strongest market and it has had hundreds of millions in support from the UK taxpayer, I can safely say that we will need a lot of convincing that easyJet needs to make such dramatic cuts."
The FTSE 100 company said after various funding initiatives are completed it expected to have about £2bn of extra liquidity. It said conditions were still too uncertain to issue financial guidance for the rest of the 2020 financial year.
UK unemployment jumped by more than 800.000 to a 24-year high of 2.1m in April - a toll that would be far heavier without the government subsidising millions of workers' wages to keep them in jobs. Analysts expect jobless figures to rise as companies survey the battered business landscape left by Covid-19.
Neil Wilson, chief market analyst at Markets.com. said: "This is the big fear playing out - temporary furlough becomes permanent firing once businesses figure out that demand has vanished. Whilst airlines will feel this more than just about any other sector, this trend will be seen in a wide range of industries."
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