EasyJet grounds entire aircraft fleet due to coronavirus

EasyJet has grounded its entire fleet of aircraft due to the coronavirus pandemic, the airline has announced.

The Luton-based carrier said parking all 344 of its planes “removes significant cost” as the aviation industry struggles to cope with a collapse in demand caused by the outbreak of the virus.

The move comes as Scottish regional airline Loganair said it expects to ask the Government for a bailout to cope with the impact of the pandemic.

EasyJet insisted it “maintains a strong balance sheet” and revealed it is in “ongoing discussions with liquidity providers”.

The airline also announced that it has reached an agreement with the Unite union on furlough arrangements for its cabin crew.

The deal will be effective from Wednesday for a two-month period and means cabin crew will be paid 80% of their average pay through the Government job retention scheme.

EasyJet chief executive Johan Lundgren said: “I am extremely proud of the way in which people across easyJet have given their absolute best at such a challenging time, including so many crew who have volunteered to operate rescue flights to bring our customers home.

“We are working tirelessly to ensure that easyJet continues to be well positioned to overcome the challenges of coronavirus.”

Sir Stelios Haji-Ioannou, the founder of easyJet, is threatening to seek the removal of board members unless the airline withdraws from a contract with Airbus to provide 107 aircraft which he said will cost £4.5 billion.

The billionaire and his family are the largest single shareholders in the carrier with a 34% stake.

He described the Airbus deal as “simply shareholder value destroying”.

He added that unless his concerns are addressed by noon on Wednesday, he will call for extraordinary general meetings every seven weeks and attempt to remove a non-executive director on each occasion.

In response to the letter, easyJet said it is “working with suppliers to defer and reduce payments where possible including on aircraft expenditure”.

EasyJet has faced criticism for paying £174 million in dividends to shareholders while asking for Government support.

But Sir Stelios said the payment was “legally at the point of no return” in February and the dividend was “rightfully paid to all shareholders”.

Loganair chief executive Jonathan Hinkles said the Covid-19 pandemic has “had an enormous effect on all UK airlines”.

He went on: “The Government has made it clear that it is open to requests for support from individual airlines and, whilst Loganair has not yet taken up this invite, we fully expect to join other UK airlines in doing so in the coming days.”

Mr Hinkles later told BBC Radio 4’s Today programme that the key issue is “about actually getting rid of payments” rather than deferring costs.

Chancellor Rishi Sunak told the aviation industry last week that he will not create a specific support package for it, but the Government is prepared to enter into negotiations with individual firms once they had “exhausted other options” such as raising cash from existing investors.

Virgin Atlantic had previously urged the Government to offer carriers emergency credit facilities worth up to £7.5 billion.

The owner of British Airways on Monday said it had bought more time to use a credit facility with its lenders that was due to run out in June.

International Airlines Group said that it had extended the 1.38 billion dollar (£1.1 billion) revolving credit facility.

Revolving credit facilities are agreements that a bank will lend a company money when needed. Unlike a normal loan the company can repay the loan at any point, and then draw more again if needed. They are usually used to cover day-to-day costs such as payrolls.