LONDON – Low-cost carrier easyJet (U2) has announced that it plans to cut its workforce by around 30%, a decision subject to consultation.
This means that around 4,500 of the 15,000-strong workforce will lose their jobs.
This is part of the airline’s overall strategy to reduce costs in the wake of the Coronavirus pandemic. The carrier is due to restart operations on June 15.
Such passenger demand will only reach 30% of the capacity recorded in the fourth quarter of last year, with full recovery expected to take around three years.
Johan Lundgren, the easyJet CEO commented on the prospective job cuts, stating that the airline is focusing on “doing what is right for the company and its long-term health and success.”
“We realize these are very difficult times and we are having to consider very difficult decisions which will impact our people – but we want to protect as many jobs as we can for the long term”, he added.
This adds another problem to those the airline has had to face over the last few weeks.
Internal conflicts within the airline has seen U2 founder Sir Stelios Haji-Ioannou try to oust the entire executive board over an Airbus cancelation that Lundgren refuses to go through with.
That the airline can easily make job cuts but not cancel aircraft orders for better liquidity could be portrayed as a sense of irony amongst its workers and consumers.
Another issue has been the data breach which has happened within the last week, affecting around nine million customers.
Lawsuits suggest that if all claims are successful, U2 could be liable for damages in excess of £18b due to this breach being the biggest in the UK aviation sector so far.
An0ther such cost-cutting measure will see the airline reducing its fleet to around 302 aircraft, which will be about 51 aircraft fewer than the anticipated fleet number for the end of 2021 prior to COVID-19.
Lundgren also commented on this fleet reduction, stating it is about the optimisation of the fleet network.
“Against this backdrop, we are planning to reduce the size of our fleet and to optimise the network and our bases. As a result, we anticipate reducing staff numbers by up to 30 percent across the business and we will continue to remove cost and non-critical expenditure at every level. We will be launching an employee consultation over the coming days.”
Viability Being Reduced?
Last week, Airways approached easyJet for a comment about the viability of the carrier with spokesperson Kirsten de Haan who stated that the cash flow is there.
“As we have explained at our trading update on 16 April, 2020, we have sufficient cash reserves to manage through a prolonged fleet grounding of nine months and have further options beyond that”, she said.
With sufficient cash reserves there, why would there be the need to cut such jobs if it is so confident about its financials? Or could it be the fact that it is down to the “further options beyond that” perspective she sent to us?
As mentioned in this article, there may be some level of discomfort that will come out of this regarding the Airbus order that hasn’t been canceled.
easyJet claims that the order cannot be canceled because of the conditions for such cancelations not being allowed during the COVID-19 pandemic.
Either way, the airline stood by it, saying that such an order is “integral to the company’s future success.”
Therefore, with the airline suggesting it is viable yet still making cuts, then that would suggest otherwise in the sense that it is looking at a way to reduce the cash burn to an even lower point than it already is.
Either way, it remains clear that like with many other carriers globally, easyJet is making significant strides in order to remain afloat and also to ensure it is in a position strong enough to turn over a profit by the time this is all over.