EasyJet To Cut 4,500 Jobs To Stay Competitive After COVID-19 Crisis
EasyJet is planning to cut up to 4,500 jobs and shrink its fleet to adjust to the smaller travel market that is forecast to emerge from the coronavirus crisis.
EasyJet, which employs more than 15,000 people in eight countries across Europe, is moving later than others in announcing job cuts as a result of the coronavirus pandemic, which has brought airlines across the world to their knees.
Most have been forced to cut jobs as they prepare for a market that is not forecast to return to 2019 levels until 2023.
EasyJet, which said on Thursday May 28 that it will launch a consultation process with staff, also plans to shrink its fleet by 15% to 302 planes by the end of 2021 and to cut costs through deals with airports, maintenance suppliers and in marketing.
Shares in easyJet rose 6% to 751 pence, which was was their highest level since mid-March, before the coronavirus crisis grounded its fleet.
"Exactly the kind of overhaul the cost base needs," Bernstein analyst Daniel Roeska said of easyJet's cuts, which go deeper than those of Ryanair and Wizz Air, who have said that they will lay off 15% and 19% of staff, respectively.
EasyJet said that it expects to be flying approximately 30% of its capacity by the fourth quarter, which leaves it trailing Ryanair, which is planning to fly 40% in July.
"The leverage to growing market share over the next two years seems to rest with Ryanair and Wizz, who see their cost bases as allowing them to exploit this crisis," Goodbody analyst Mark Simpson said.
EasyJet chief executive Johan Lundgren said that job cuts will ensure easyJet emerges as "a more competitive business". Approximately 8,000 of its employees are based in Britain.
UK Quarantine Rule Talks And Other Issues
Lundgren told reporters that easyJet is talking to the British government about a 14-day quarantine rule, which airlines say will further stifle any travel recovery.
Over the last six weeks, easyJet has also been grappling with an attempt by its biggest shareholder to oust its senior bosses, and the fallout from a cyber attack.
Talks With Lessors
EasyJet said that talks with lessors that are interested in acquiring aircraft on a sale and leaseback basis are ongoing and proceeds will now be £500 million to £650 million, which is approximately 25% higher than expected in April.