EasyJet cancels more flights; calls for govt backing to save industry

EasyJet said government backing would be needed to save the European airline industry from the impact of the coronavirus as it warned it may have to ground a majority of its fleet.

The budget carrier said it had made further significant cancellations as European countries moved into lockdown, adding that these would would “continue on a rolling basis for the foreseeable future”.

Shares in the sector have been hit hard, with UK regional airline Flybe already going bust as countries start to close their borders to foreign travellers as they tried to slow the spread of the pandemic. EasyJet shares have fallen 62%.

EasyJet on Monday said it maintained a strong balance sheet including a £1.6bn cash balance, an undrawn $500m revolving credit facility, unencumbered aircraft worth in excess of £4bn and a “large and valuable slot portfolio” with no debt re-financings due until 2022.

“European aviation faces a precarious future and there is no guarantee that the European airlines, along with all the benefits it brings for people, the economy and business, will survive what could be a long-term travel freeze and the risks of a slow recovery,” the company said.

Chief executive Johan Lundgren said coordinated government backing would be needed "to ensure the industry survives and is able to continue to operate when the crisis is over".

Russ Mould, investment director at AJ Bell, said airlines would need significant levels of funding to survive "be it lines of credit or chunky cash piles".

"Shareholders can wave goodbye to any dividends and airlines certainly won’t be buying back shares in the current environment, even though their stock may look very cheap compared to recent history," he said.

“EasyJet and (British Airways owner) International Consolidated Airlines have both announced that unprecedented levels of travel restrictions could see a large amount of their fleet grounded. Beyond using the time to do some maintenance, the airlines will simply be sitting on their hands."

“The knock-on effect is that staff will be forced to take leave and service companies such as John Menzies which helps to clean and load EasyJet planes when they land will not be able to do their job."