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British Airways-owner, easyJet make drastic cuts to try to survive coronavirus

imageStock Markets1 hour ago (Mar 16, 2020 05:14AM ET)

(C) Reuters. BA plane taxis past tail fins of parked aircraft to runway near Terminal 5 at Heathrow Airport

By Sarah Young

LONDON (Reuters) – The owner of British Airways and easyJet, Europe’s no.3 and no.4 airlines, said they would ground aircraft on an unprecedented scale in a battle to survive the travel restrictions and European lockdowns now convulsing the industry.

Britain’s government said it would discuss how to protect the industry from the coronavirus pandemic after easyJet on Monday joined Virgin Atlantic in calling for government help as people across the world stop traveling.

“European aviation faces a precarious future and it is clear that coordinated government backing will be required to ensure the industry survives and is able to continue to operate when the crisis is over,” easyJet’s CEO Johan Lundgren said in a statement.

BA-owner IAG (L:ICAG) stopped short of asking for government backing, however. IAG’s CEO Willie Walsh has long-opposed any government help for airlines.

He was due to retire later this month, but it was announced on Monday that he would defer his retirement for a few months to provide stability during this challenging time.

IAG said it would cut its flying capacity by at least 75% in April and May, while easyJet (L:EZJ) said it could ground the majority of its fleet on a rolling basis. The airlines are the no.3 and no.4 European carriers on a passenger number basis.

Both airlines said they had strong balance sheets, providing details on their cash positions and credit facilities.

IAG, which also owns Iberia and Aer Lingus, said it had total liquidity of 9.3 billion euros, while easyJet said it had 1.6 billion pounds of cash plus an undrawn $500 million revolving credit facility.

Both airlines said they could not provide profit guidance for their current financial years. IAG also detailed cost cuts including a freeze on discretionary spending, working hours reductions and a temporary suspension of employment contracts.

British Airways-owner, easyJet make drastic cuts to try to survive coronavirus

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