EasyJet grounds its entire fleet to save costs and cushion the economic blow of the Coronavirus

The
Coronavirus pandemic has hit the global travel industry the hardest with
multiple worldwide airlines struggling to sustain their financial stature
enough to resume operations after the health crisis is over.

In
its statement on Monday, UK’s
low-cost carrier, EasyJet (LON:EZJ) announced that its entire fleet
comprising more than 330 aircraft is to be grounded amidst the ongoing health
emergency. The carrier gave no guidance about when the flights can be expected
to restart.

EasyJet
Places Cabin Crew On Furlough

The
airline also declared 4,000 of its cabin crew in the UK to be placed on
furlough starting on April 1^st for the next 2 months. As directed by
the UK’s job retention scheme, the crew will be getting 80% of the average
salary during this time.

With
traveling coming to a standstill in Europe, airlines are struggling to survive
as the restrictions on traveling and tourism have left them with no revenue. A bunch
of airlines in the United Kingdom were previously relying on the government to
announce financial support targeted directly at the airline industry.

Last
week, however, the government told the airlines to first try and raise capital
by themselves. They were directed to explore all available options including
negotiating with existing investors for additional funding. If none of the
options work, the government said, it will step in and devise an aid package
for the airline industry.

EasyJet’s
statement on Monday also highlighted that the company is currently focusing on
liquidity in the short-term. It is resorting to saving costs and is communicating
closely with the suppliers to minimize or defer payments. The company also said
that it was negotiating with liquidity providers as well.

The
recent move of grounding its entire fleet, as per the airline, helped cut a
huge chunk of costs.

Loganair
To Seek Government Financial Support

In
separate news, Loganair
announced on Monday to have exhausted its available options. It now plans
on seeking government support later this week. Loganair is the UK’s low-cost
regional carrier for travel from the Scottish islands to the mainland.

According
to the Financial Times, Virgin Atlantic has already applied for government
financial support amidst the economically challenging time.

At
the time of writing, EasyJet is trading at 557 pence per share in the stock
market that marks an over 60% decline in 2020 so far. The company has a market
cap of £2.21 billion with a price to earnings ratio of 6.33.