EasyJet chief executive Johan Lundgren has warned that the aviation industry is facing its worst crisis in history – one that is threatening many carriers with bankruptcy.
“This is really about industry survival,” he told ITV’s Robert Peston in a television interview on 18 March. “What we have been asking [government] for…is about the support to ensure this industry not only survives but is there when the economic recovery takes place.”
Speaking the next day, Lundgren told the BBC radio programme Today that EasyJet’s main request was for the UK government to provide loans on commercial terms to itself and other carriers. The deferral of tax payments is another industry request.
EasyJet is one of the financially strongest airlines in Europe, he stresses, with solid credit ratings and healthy balance sheet. Yet Lundgren notes that it, like all carriers, has a large amount of fixed costs it must pay even when revenues have ceased.
The issue that EasyJet and the wider industry face is uncertainty over how long the crisis will continue, which is why it is important that additional financing be secured.
“If we don’t get sufficient support and [the coronavirus outbreak] continues the aviation industry will not be intact. It will not be the way you look at it today,” he told Peston. “Businesses will go bankrupt long before a year.”
He notes that EasyJet has so far cancelled 14,000 flights in March, which equates to 8 million seats and 40% of its capacity. These cancellations will be extended to reflect the new restrictions on movement that governments are enacting. “Most likely the majority of the fleet will be grounded in April and May.”
Lundgren says EasyJet is taking action to preserve cash and access financing through their fleet.