EasyJet insists that it has enough cash to survive a ‘lengthy’ grounding of its fleet after arranging new loans worth around £400 million.
Announcing an anticipated first-half pre-tax loss of £360 million to £380 million to the end of March, easyJet estimated that keeping all its aircraft on the ground will cost it £1.2 billion, it will use around £2.2 billion if its fleet remains grounded for six months, and if it’s grounded for nine months it will use £3 billion in cash.
However, the airline said that ‘decisive’ cost-cutting, deferring the purchase of 24 new aircraft and the raising of ‘significant’ new finance has ensured it can endure a lengthy fleet grounding.
In a trading update this morning, chief executive Johan Lundgren said: “Our first half trading performance was very strong prior to the impact of coronavirus, which shows the strength of easyJet’s business model.
“Since then I have been immensely proud of our team, right across the business, and the way they have worked through these tough times to put us in the strong position we are in now.”
He said swift action taken by the airilne included:
- A cost cutting initiative to ‘dramaticaly’ bring down cash burn
- Deferred the delivery of 24 aircraft
- Executed a funding programme which will add almost £2 billion in extra cash funding, strengthening its liquidity position.
EasyJet said bookings for winter are well ahead of this time last year following its decision to put seats on sale much earlier to allow customers to re-book flights that had been cancelled due to the pandemic.
It said more than half of disrupted had chosen vouchers or alternative flights rather than a refund.
However, the airline admitted that ‘there can be no certainty of the date for restarting commercial flights’.
“We will evaluate continuously based on changing regulations and customer demand and will update the market in due course. Our strategy, network and data science teams are working through different demand scenarios for re-starting flying, which could be done with as little as two weeks’ notice,” it added.
When it does resume flights, it is looking at leaving the middle seat in every row empty to maintain some social distancing and it is considering options for disinfecting aircraft.
The airline will announce its half-year results on June 30.