EasyJet to slash workforce by 30% as it prepares for years of weak demand
Low-cost European carrier EasyJet has announced plans to slash its workforce by up to 30% as it overhauls operations to reflect reduced demand for air travel due to the coronavirus pandemic.
The company said in a statement Thursday that it will start a consultation with employees in the coming days to reduce staff numbers. It will also slash its fleet size, make changes to its flight network and find "more efficient ways of working."
EasyJet has over 15,000 employees, according to its most recent annual report, suggesting that as many as 4,500 jobs could be eliminated.
"We want to ensure that we emerge from the pandemic an even more competitive business than before," CEO Johan Lundgren said in a statement, adding that the company "will continue to remove cost and non-critical expenditure at every level."
EasyJet (ESYJY) typically operates about 2,000 flights a day across 36 countries, mostly in Europe. The airline grounded all 334 of its planes at the end of March due to travel restrictions and furloughed 4,000 UK cabin crew. It later tapped the UK government's Covid Corporate Financing Facility to raise £600 million ($746.6 million).
The carrier said last week that it will resume flying on June 15, servicing a small number of routes mainly in the United Kingdom and France, flying only 30% of its regular capacity over the summer.
"So far, the booking trends on the resumed flights have been encouraging, and the demand indications for summer 2020 are improving, albeit from a low base," the company said. "Bookings for winter are well ahead of the equivalent point last year, which includes customers who are rebooking coronavirus-disrupted flights for later dates," it added.
Global aviation has been brought to a virtual standstill by the pandemic, forcing some airlines to seek government bailouts, while bankrupting others. Carriers are gradually reinstating flight schedules as lockdowns ease, but they do not expect passenger demand to return to its previous level for several years.
EasyJet does not expect levels of market demand seen in 2019 to be reached again until 2023 and said it is in "active consultation" with airports and ground handlers to reduce costs. It has also deferred spending on maintenance and is renegotiating contracts with advertising agencies. The carrier expects to have 302 aircraft towards the end of next year, about 14% fewer than previously anticipated.
Daniel Roeska, a senior research analyst at Bernstein, described the measures as "exactly the kind of overhaul the cost base needs."
"The company looks to be focusing on the right things and appears to be seizing the opportunity to reshape its cost base," he added.
BALPA, the UK pilots union, said it will need "a lot of convincing that EasyJet needs to make such dramatic cuts to jobs," adding that the airline's own projections forecast a recovery in passenger numbers by 2023. "This is a temporary problem that doesn't need this ill-considered knee-jerk reaction," the union's general secretary Brian Strutton said in a statement.