In an attempt to force the cancellation of its Airbus orders, easyJet's founder and largest shareholder, Stelios Haji-Ioannou, is urging shareholders to oust directors. His concerns for easyJet are shared by all airlines: cash balance, survival in lockdown and oversupply of aircraft in the recovery.
EasyJet has tapped a UK government loan scheme and taken other steps to bring its total liquidity to GBP2.3 billion by 9-Apr-2020, equivalent to approximately 140 days of 2019 revenue, more than available to most major European airline groups.
In lockdown, with variable costs effectively removed, with additional cost saving measures in place to lower fixed costs, and assuming the deferral of capital expenditure, this cash reserve should be enough to ensure easyJet's survival well beyond the end of 2020.
Nevertheless, Stelios' intervention raises legitimate questions about future fleet needs in the post-virus world, not only for easyJet, but also for all European airlines.
He envisages a sluggish domestic-led recovery, with airlines competing for "a few profitable routes for a few aircraft at a time" and confidence in international travel slow to build. Since only 13% of European airline ASKs were domestic in 2019, this is a challenging outlook.