Coronavirus: Easyjet and Lufthansa bosses warn that industry will need state aid
Easyjet chief executive Johan Lundgren has warned that he expects to see “a lot of failures” in the global aviation industry due to the damage done by the coronavirus outbreak.
Speaking to the BBC, Lundgren said: “I have been working in the industry for 30 years and I have never seen anything like this.”
“If we don’t get sufficient levels of support from the Government and this continues for that period of time, the aviation industry will not be intact”, he added.
Easyjet has already cancelled 14,000 flights this month but said more could be in the offing depending on how the situation developed.
Lundgren’s comments chimed with those of Lufthansa boss Carsten Spohr, who said that the industry would be a “different world” once the crisis has passed.
The carrier, which is Europe’s second biggest airline by passenger numbers, has taken similar steps to other airlines by cutting flights and grounding planes in the face of the growing crisis.
“This crisis will sustainably and structurally change our industry,” Spohr said. “But we believe that we are well prepared and have experience in crisis management.”
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Spohr added that the group would seek support from the German state when it was “necessary”, but stressed it had not yet reached that point.
Thus far Lufthansa has focused on cutting costs where possible, grounding 700 of its 763 planes and cutting 95 per cent of its passenger capacity.
Spohr and fellow members of the carrier’s executive board will also take a 20 per cent pay cut, a measure that many leading airline executives have taken in recent weeks.
The value of the airline’s stock has fallen about 50 per cent in the past year, but pushed back a little today after Spohr’s comments.
Lufthansa’s market cap sits at around €4.2bn, and about 60 per cent of its costs are made up by changeable elements like fuel costs, which will fall in line with limited flights.
In order to ensure it has enough liquidity, Lufthansa said it had raised an additional €600m (£563.2m) in recent weeks.
It also has unused credit lines of around €800m and is seeking to raise further funds, including through aircraft financing.
Spohr also said that the airline had been in talks with manufacturers Airbus and Boeing about whether to take delivery of new planes, given the circumstances.