EasyJet is to cut 30% of jobs while warning that demand will not return to 2019 levels for three years.
The airline employs around 15,000 staff so the cuts could affect as many as 4,500 people.
The cuts follow thousands of job losses announced by British Airways, Virgin Atlantic and Ryanair.
The UK budget carrier expects to offer less than a third of its previous capacity in the final quarter of the current financial year.
The fleet will be reduced by 51 aircraft to around 302 by the end of 2021.
“The reduction in fleet size will be achieved through the measures previously announced, including the deferral of new aircraft deliveries and the re-delivery of leased aircraft,” easyJet said.
“In line with Iata projections, easyJet believes that the levels of market demand seen in 2019 are not likely to be reached again until 2023.
An employee consultation process will be launched on proposals to reduce staff numbers by up to 30%, “reflecting the reduced fleet, the optimisation of our network and bases, improved productivity as well as the promotion of more efficient ways of working”.
The consultation is due to start within days.
Brian Strutton, general secretary of pilots’ union Balpa, condemned the cuts.
He said: “EasyJet staff will be shocked at the scale of this announcement and only two days ago staff got a ‘good news’ message from their boss with no mention of job losses, so this is a real kick in the teeth.
“Those staff have taken pay cuts to keep the airline afloat and this is the treatment they get in return.
“EasyJet has not discussed its plans with Balpe so we will wait and see what impact there will be in the UK.
“But given easyJet is a British company, the UK is its strongest market and it has had hundreds of millions in support from the UK taxpayer,
“I can safely say that we will need a lot of convincing that easyJet needs to make such dramatic cuts.
“Indeed, easyJet’s own projections, though on the pessimistic side, point to recovery by 2023, so this is a temporary problem that doesn’t need this ill-considered knee-jerk reaction.”
The carrier said it is taking “decisive action” to remove cost and non-critical expenditure from the business “at every level”.
- Airports and ground handling – through consultation with airports and ground handlers regarding revised contracts to reduce costs
- Maintenance – swift action was taken to defer time-dependent maintenance spend due to reduced flying. Discussions are continuing discussions with suppliers
- Selling and marketing – commercial teams are renegotiating spend with agencies and prioritising on the most effective activities to optimise traffic and sales ahead of the restart of flying on June 15
The carrier added: “Whilst we have also undertaken cost cutting measures within easyJet holidays, it maintains a high proportion of variable costs, which will flex with revenue, and has no inventory risk”.
Detailing capacity cuts, the airline said: “Our fleet deal with Airbus gives easyJet the flexibility to react to the different circumstances and varying demand environments which we may be faced with in the coming period.
“However, as a low cost airline with a strong network, we believe we are well placed to benefit from customers seeking great value during that recovery period.”
EasyJet has signed two loans totalling £400 million, secured against aircraft assets, tapped into £600 million through the government’s Covid Corporate Financing Facility as well as drawing down on a $500 million revolving credit facility.
“Furthermore we continue to engage with an active lessor market interested in acquiring aircraft from easyJet’s fleet on a sale and leaseback basis,” the airline said.
“Announcements on the progress of these engagements will be made in due course, with anticipated proceeds now expected to be in the range of £500 million-£650 million.
“Upon closure of all these funding initiatives, we expect to have generated total additional liquidity of.£2 billion with our cash burn during grounding being broadly in line with our estimates published in April.”
The airline is to resume flying on June 15 on a small number of domestic routes in the UK and France “where we believe there is sufficient customer demand to support profitable flying”.
Further routes will be announced as customer demand increases and government restrictions across Europe are relaxed.
“So far, the booking trends on the resumed flights have been encouraging, and the demand indications for summer 2020 are improving, albeit from a low base,” the carrier added.
“Bookings for winter are well ahead of the equivalent point last year, which includes customers who are rebooking coronavirus-disrupted flights for later dates.”
Chief executive Johan Lundgren said: “We realise that these are very difficult times and we are having to consider very difficult decisions which will impact our people, but we want to protect as many jobs as we can for the long-term.
“We remain focused on doing what is right for the company and its long-term health and success, following the swift action we have taken over the last three months to meet the challenges of the virus. Although we will restart flying on 15 June, we expect demand to build slowly, only returning to 2019 levels in about three years’ time.
“Against this backdrop, we are planning to reduce the size of our fleet and to optimise the network and our bases.
“As a result, we anticipate reducing staff numbers by up to 30% across the business and we will continue to remove cost and non-critical expenditure at every level. We will be launching an employee consultation over the coming days.
“We want to ensure that we emerge from the pandemic an even more competitive business than before, so that easyJet can thrive in the future.”
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