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April 7, 2020

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EasyJet says running out of money fast

The founder and top shareholder of European carrier easyJet says the company has enough money only to get through August at best and wants to cancel a 4.5 billion-pound (US$5.5 billion) contract with planemaker Airbus for what he calls 107 “useless aircraft.”

Stelios Haji-Ioannou says that terminating the contract is the only way for shareholders to retain any value in their holdings. EasyJet, which flies predominantly in Europe, has grounded all 344 planes and like other airlines is struggling mightily with the global lockdowns on business and travel.

European companies are expected to get financial support from the government, although unlike the US there has not been a coordinated regional plan to bail out airlines or planemakers.

In the US, Delta Air Lines, American Airlines, United Airlines and JetBlue have said they applied Friday for their share of US$25 billion in federal grants designed to cover airline payrolls for the next six months. None disclosed the amount they are seeking. The money was part of US$2 trillion relief bill approved last week. Delta’s CEO says his airline is burning more than US$60 million cash per day, and United’s president puts it at US$100 million a day.

Singapore, meanwhile, said it will suspend its Changi Airport Terminal 2 for 18 months from May 1. The airlines in Terminal 2 will be reallocated across the remaining terminals.




 

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