easyJet-Stelios spat raises post-virus fears for all Europe's airlines

Premium Analysis

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.

Become a CAPA Member to access Analysis Reports

This CAPA Premium Analysis Report is 1,579 words.
Become a CAPA Member

Our Analysis Reports are only available to CAPA Members. CAPA Membership provides exclusive access to in-depth insights on the latest developments in the aviation and travel industry, developed by our team of dedicated analysts located in Europe, North America, Asia and Australia.

Each report offers a fresh perspective on the latest industry trends and is available online or via the CAPA mobile app, with customisable alerts to help you stay informed and identify new business opportunities.

CAPA Membership also provides access to our full suite of tools, including a tailored selection of more than 1,000 News Briefs every week and comprehensive data and analysis on thousands of companies around the world.