Easyjet has grounded its entire fleet because of the coronavirus pandemic as speculation mounted that crisis-hit airlines will seek Treasury bailouts to avoid complete collapse.
The budget airline, which carried 96 million passengers last year, said that it would park all 344 of its planes and temporarily lay off cabin crew to remove “significant costs”.
It said that there was “no certainty” for the date of restarting commercial flights.
Easyjet is the first of the UK’s major airlines to completely ground its fleet following a collapse in demand caused by coronavirus. It has already run 650 “rescue flights” to repatriate 45,000 passengers who faced being stranded abroad by lockdown measures imposed by countries such as Italy and Spain.
The aviation industry is struggling to cope with spiralling losses.
Today it was confirmed that the Scottish regional airline Loganair expects to ask the government for a bailout. Other airlines, including Virgin Atlantic, are on the verge of making an official request to the Treasury for tens of millions of pounds.
Yesterday, a cross-party group of MPs, including two former aviation ministers, gave warning that airlines risked imminent collapse without a tailored financial rescue deal.
In a letter to the chancellor, the 38-strong group said that passenger numbers at UK airports were “approaching near zero” because of Covid-19 and carriers were facing a “pressing challenge to survive”.
Rishi Sunak was urged to reverse a decision made last week to rule out an industry-wide financial package to ensure that airlines and airports survived the crisis.
Last week Grant Shapps, the transport secretary, said that the government could buy a stake in UK airlines that faced collapse. He told MPs on the transport committee that “everything was on the table”, adding that it was “important to save companies that should survive in normal times”.
Flybe, Europe’s biggest regional airline, has already collapsed after the sudden drop in passenger numbers pushed the troubled carrier over the edge.
Last week, an analysis published by the International Air Transport Association said that airlines in the UK faced being hit harder than those anywhere else in Europe because of the slump in passenger numbers. The study said that UK carriers were expecting to lose almost £18 billion this year, with passenger numbers declining by 113.5 million, almost twice the expected drop witnessed by airlines in France and Italy.
EasyJet insisted that it maintained a strong balance sheet and revealed that it was in “ongoing discussions with liquidity providers” to keep the airline going.
It also announced that it had 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 that cabin crew will be paid 80 per cent of their average pay through the government job retention scheme.
Johan Lundgren, chief executive, 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.”
The airline pledged to work with governments to “operate additional rescue flights as requested”.
Jonathan Hinkles, chief executive of Loganair, said that the pandemic had had an enormous effect on all UK airlines. “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 Sunak last week ruled out an all-encompassing rescue package for the aviation industry, saying that deals would only be brokered with individual companies as a “last resort” when all money from shareholders and investors was exhausted. He told airlines to take advantage of other economic support measures, such as the offer to pay 80 per cent of wages of staff temporarily laid off.
Yesterday’s letter, signed by the former Conservative aviation minister Robert Goodwill and Sir Graham Brady, chairman of the 1922 committee of Tory backbenchers, said that these measures alone would not be enough.
Travel restrictions imposed by countries across the world have “all but eliminated airline and airport revenue but not costs, which are substantial and go far beyond solely wages”, the letter said.
“It remains unclear what the duration of the economic impact will be on the UK’s airlines and airports, who face a pressing challenge to survive,” it added.
The letter welcomed measures to protect the economy but said: “Given the scale of the impact on aviation, they alone will not be enough and you have rightly indicated that further industry-wide measures will be considered to both support the sector through the crisis and enable its recovery.”
