- ‘There will be demand for holiday passengers. Lockdowns we have seen in countries mean a lot of people want to have a holiday’.
By Andrew Atkinson
easyJet have expressed confidence it now has finances to survive a nine month grounding of its fleet – after securing additional funding.
“We are now in a position to remain cash positive – even if we are grounded for nine months,” said chief executive Johan Lundgren.
The UK budget airline grounded its entire fleet on March 30, due to the COVID-19 pandemic.
In a trading update on April 16, easyJet has reportedly signed two term loans – totalling approximately £400 million ($492 million), secured against aircraft and maturing in 2022.
easyJet are also reportedly in talks for a sale and lease-back of additional aircraft from its fleet, expected to rack up proceeds of between £400-550 million.
Along with previously announced funding measures, it takes the airline’s anticipated cash balance to approximately £3.3 billion.
While Lundgren is reported as saying he does not expect the crisis to last that long, easyJet is looking at other sources of funding and assistance, including from governments in all its major markets, saying he is confident of being able to raise more funds – if needed.
Lundgren says once countries lift travel restrictions, the carrier will need two weeks to get the majority of its fleet back up and running.
Lundgren expects domestic travel will start first, then expects to see bilateral arrangements, where countries open up their borders to each other, depending on the public health situation.
“I do think there will be demand for holiday passengers. I think the lockdowns we have seen in countries mean a lot of people want to go out and have a holiday, though it depends on what restrictions are in the countries,” he said.
“There will be a recovery – at some point – in time we will get back to a situation, where the demand will be what it was,” he said.
easyJet plan to keep middle seats on aircraft free – to allow passengers to keep their distance.
easyJet disclosed on April 9 that it had deferred the delivery of 24 aircraft that the carrier was originally due to take in 2020-2022. The airline also has an option to defer a further five aircraft, due to be delivered in 2022.
“It adapts to a reduced environment for the coming years, and gives flexibility to pick up demand as we progress through that,” said Lundgren.
For the first half to March 31, easyJet reportedly expects to report a loss before tax of £360-380 million, including £175-185 million from the over-hedging of fuel and foreign exchange.
Stripping out the hedging impact gives an expected reported loss of £185-205 million, an improvement on last year’s first half loss of £275 million.
easyJet are scheduled to announce results for the first half of the 2019-20 fiscal year on June 30.
Low levels of mainland flights already operating in China
In China some capacity has been restored for Mainland flights, although it is likely to remain low for the foreseeable future.
In its monthly update, the Civil Aviation Administration of China (CAAC) states that the volume of flights may continue to operate at low levels in the future, due to the coronavirus outbreak, which still holds significant risk levels.
Since February, when the COVID-19 outbreak hit China, Chinese carriers have been steadily adding domestic capacity from March into April and May.
CAAC spokesperson and director of aviation safety Xiong Jie said the administration will focus, first on establishing pandemic risk prevention, to create a safe operating environment.
For the month of March, airlines in China carried 15.1 million passengers, nearly 72% lower year-on-year.
The administration also provided updates on the gradual restoration of flights into Wuhan, the epicentre of the outbreak.
When the Wuhan Tianhe International airport re-opened on April 8, 19 Chinese carriers resumed flights to 45 domestic points.
The CAAC noted that as of April 14, more than 40,000 passengers have flown in and out of Wuhan. Nearly 800 in and outbound passenger flights have also been mounted in the period.
