EasyJet Responds After Founder Warns Airline “Short of Money By August”

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The Luton-based airline immobilized all of its planes last week as demand for flights plummeted due to the coronavirus pandemic. Photo: Ian Georgeson Copyright: JPIMedia Resell

The senior contractor also called on the carrier to remove CFO Andrew Findlay.

The warning comes days after Sir Stelios, which has the largest stake in EasyJet, asked for a meeting of the company’s shareholders to decide whether to remove another director from the board of directors.

EasyJet on Friday rejected the founder’s request for the meeting to remove director Andreas Bierwirth.

Sir Stelios has now asked that Findlay be sacked because he said it would be “the best way to prevent him from writing checks worth a billion pounds more to Airbus every year.”

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It comes after the Luton-based airline grounded all of its planes last week when demand for flights plummeted due to the coronavirus pandemic.

CEO Johan Lundgren said the airline would consider accepting UK government bailouts if necessary. But Sir Stelios said he would not need the financial lifelines if he terminated the contract with Airbus.

He also stressed that he would not invest more money in the airline as long as the £ 4 billion contract with the European aircraft manufacturer was in place.

In a statement, Sir Stelios said: “The termination of the contract with Airbus is the only chance for current shareholders to maintain the value of their shares.

“If EasyJet terminates the Airbus contract, then it does not need loans from the UK taxpayer and has the best chance of surviving and thriving in the future with an injection of additional capital from the markets.

“But if easyJet stumbles while taking British taxpayer money in the form of loans only to return it to Airbus, it will have to raise new equity anyway over the next three to six months – reducing the value of our holdings current to near zero.

“To avoid any ambiguity, I will not inject equity into easyJet while Airbus’ liability is in place.”

A spokesperson for EasyJet, which operates a series of routes from Scotland, said: “The board is managing the unprecedented challenges facing the airline and the aviation industry in its together.

“We remain absolutely focused on short-term liquidity, cutting corporate spending while preserving jobs and securing the long-term future of the airline.

“We think holding a general meeting would be an unnecessary distraction from tackling the many immediate problems our business faces.”

In a new investor update, the airline said it expects to have cash reserves of around £ 2.3 billion.

CEO Lundgren said, “We remain absolutely focused on ensuring the long-term future of the airline, reducing our costs and preserving jobs, to ensure that EasyJet is in the best position to take over the flight after the pandemic is over. We are pleased that we have now reached an agreement with Unite and Balpa for the UK-based EasyJet pilot and crew leave arrangements.

“Our current priority is to preserve short-term liquidity, so we borrowed from CCFF [Covid Corporate Financing Facility] and drawn on our revolving credit facility to increase our liquidity in the event of extended fleet grounding. “

“Before the pandemic, EasyJet was a brand that offered cheap flights that matched consumers’ budgets. So it’s no longer a question of which airline offers the best deals, but rather which airlines will still have money after this disaster ends.

“Adding to that, Sir Stelios wishing to cancel a £ 4.5 billion contract with Airbus, it is more difficult to decide on a deal, and at the moment its current shareholders want to maintain the value of their shares.

“EasyJet is one of the few airlines to offer the cheapest flights to Europe, but if the airline has no money at the end of August, it does not only cause stress to the brand as a whole , but also to customers who have currently booked vacations with the airline and employees who don’t know what’s going on in their careers – this is a very critical time for EasyJet and they must act quickly. “

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Coronavirus: British Airways and Easyjet among the airlines immobilizing 95 Scottish flights per week

Meanwhile, Airline Norwegian suffered a 61% drop in demand last month.

The budget carrier said it carried 1.2 million passengers in March, up from three million in the same month in 2019.

Norwegian Managing Director Jacob Schram said: “The speed of the global Covid-19 epidemic throughout the month of March had a profound impact on the entire Norwegian network, as cancellations in accordance with travel advice global and falling demand, were implemented throughout the month. “

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