EasyJet founder wants to scrap £4.5bn Airbus deal to save the airline
Image credit: DT
EasyJet founder Sir Stelios Haji-Ioannou has warned that the firm could run out of money by August because of the devastating impact that Covid-19 has had on passenger numbers.
Currently the largest shareholder of the company, Haji-Ioannou has also said that the airline must terminate a £4.5bn deal with Airbus to provide it with 107 new planes before he provides any additional equity for the airline to stay afloat.
He added that the planes on order are “useless” since the coronavirus pandemic has brought air travel to a near standstill.
“Terminating the Airbus contract is the only chance current shareholders have to maintain any value in their shares,” Haji-Ioannou said in a statement.
“If EasyJet terminates the Airbus contract, then it does not need loans from the UK taxpayer and it has the best chance to survive and thrive in the future with some injection of additional equity provided for by the markets.
“But if EasyJet stumbles along whilst taking UK taxpayers’ money as loans only to pass it on to Airbus, it will have to raise fresh equity anyway in the next three to six months – reducing the value of our current shareholdings to close to zero.”
Airbus has said the order from EasyJet is firm, meaning binding, while the airline said on Monday its focus was on short-term liquidity to ensure its future.
An EasyJet spokesman said: “The board is managing the unprecedented challenges facing the airline and the aviation sector as a whole.
“We remain absolutely focused on short-term liquidity, removing expenditure from the business alongside safeguarding jobs and ensuring the long-term future of the airline.”
Airlines across the world are struggling to stay afloat with whole fleets grounded, including EasyJet’s 344 planes, due to travel restrictions and plunging demand.
Norwegian said today that it suffered a 61 per cent drop in demand last month - it carried 1.2 million passengers in March, compared with 3 million during the same month in 2019.
The Scandinavian airline has repeatedly reduced its flight schedule in recent weeks in response to the collapse in demand. Its total capacity has now been cut by up to 85 per cent
Some 7,300 staff members have been temporarily laid off by Norwegian, which equates to 90 per cent of its workforce.
Norwegian usually carries almost six million UK passengers each year from Gatwick, Manchester and Edinburgh airports to 30 destinations worldwide.
The airline has offered some popular long-haul deals which are unprecedented amongst most other carriers such as a £99 fare to New York.
But it has been struggling to keep up with its finances as the company has rapidly expanded and had already been struggling before the coronavirus pandemic hit.
In January EasyJet’s partner Wright Electric said it was developing engines for its electric narrow-body aircraft that are big enough for commercial flights.
Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.