With severe restrictions on movement now being implemented across Europe both carriers will be facing the prospect of grounding their entire fleets. Tony McDonough reports
Liverpool John Lennon Airport’s two biggest airlines Ryanair and easyJet are close to shutting down operations a much of the world grinds to a halt due to the coronavirus.
With severe restrictions on movement now being implemented across Europe both carriers will be facing the prospect of grounding their entire fleets over the next seven to 10 days.
The whole aviation industry is now in for its survival and and while both Ryanair and easyJet have strong balance sheets and significant cash reserves, they are taking drastic and immediate action to slash their cost base. This is set to have a significant impact on many of their employees.
Ryanair holds around €4bn in cash and equivalents while easyJet £1.6bn cash balance and an undrawn $500m revolving credit facility.
In a statement, Ryanair said: “Over the past 7 days, Italy, Malta, Hungary, Czech Republic, Slovakia, Austria, Greece, Morocco, Spain, Portugal, Denmark, Poland, Norway and Cyprus have imposed flight bans of varying degrees.
“Ryanair expects the result of these restrictions will be the grounding of the majority of its aircraft fleet across Europe over the next seven to 10 days. In those countries where the fleet is not grounded, social distancing restrictions may make flying to all intents and purposes, impractical, if not, impossible.
“For April and May, Ryanair now expects to reduce its seat capacity by up to 80%, and a full grounding of the fleet cannot be ruled out. Ryanair is taking immediate action to reduce operating expenses, and improve cash flows.
“This will involve grounding surplus aircraft, deferring all capex and share buybacks, freezing recruitment and discretionary spending, and implementing a series of voluntary leave options, temporarily suspending employment contracts, and significant reductions to working hours and payments.
“We are working with our people and our unions across all EU countries to address this extraordinary and unprecedented Covid-19 event, the impact and duration of which is, at this time, impossible to determine.
“Our focus now is on completing as much of the scheduled flying programme as is permitted by national governments over the next seven days, so that we can repatriate customers, where possible, even as flight bans are imposed and ATC and essential airport services are reduced.
In its statement, easyJet said: “Due to the unprecedented level of travel restrictions being imposed by governments in response to the coronavirus pandemic and significantly reduced levels of customer demand, easyJet has undertaken further significant cancellations.
These actions will continue on a rolling basis for the foreseeable future and could result in the grounding of the majority of the easyJet fleet. easyJet will continue to operate rescue flights for short periods where we can, in order to repatriate customers.”
Johan Lundgren, easyJet’s chief executive added: “European aviation faces a precarious future and it is clear that coordinated government backing will be required to ensure the industry survives and is able to continue to operate when the crisis is over.”