EasyJet will shortly enter into consultation with staff over plans to cut its workforce by up to 30% due to the ongoing, and likely longer-term, impacts of the coronavirus pandemic.
The budget carrier on Thursday (28 May) announced wholesale plans to restructure its business in the belief a return to 2019 market demand is now unlikely until 2023 at the earliest.
Besides job cuts, cost-saving measures include reducing the size of its fleet to around 300 aircraft by the end of 2021, optimising its route network and base structure, increasing productivity through more efficient working practices, and reducing cost and non-critical expenditure "at every level" of the business.
It comes as easyJet prepares to resume flying on 15 June, initially serving a small number of mainly UK domestic routes where the airline believes there is sufficient demand to support profitable flying.
"We realise 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," said chief executive Johan Lundgren.
He continued: "We remain focused on doing what is right for the company and its long-term health and success, following the swift action we have taken over the last three months to meet the challenges of the virus. Although we will restart flying on 15 June, we expect demand to build slowly, only returning to 2019 levels in about three years’ time.
"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% 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.
"We want to ensure that we emerge from the pandemic an even more competitive business than before, so that easyJet can thrive in the future."
Other actions being taken by easyJet include consulting with airport and ground handling staff on revised contractions, deferring maintenance due to the grounding of aircraft, and prioritising traffic and sales ahead of a resumption of flying.
Come Q4, easyJet expects to fly around 30% of Q4 2019 capacity. It expects its 2021 year-end fleet to comprise 302 aircraft, 51 fewer than anticipated prior to Covid-19. Fleet reduction will be achieved through deferring new deliveries.
"Our fleet deal with Airbus gives easyJet the flexibility to react to the different circumstances and varying demand environments which we may be faced with in the coming period," said the carrier in a note to the stock exchange on Thursday.
EasyJet has so far secured around £1.5 billion in additional cash headroom, and expects to raise a further £500 million to £650 million from disposing of aircraft on a sale and leaseback basis. It says total liquidity will exceed £2 billion, mitigating cash burn owing to grounded operations.
Cost-cutting measures have hit easyJet Holidays too, the carrier’s newly-relaunched tour operation, but easyJet says the impact would be minimal as the operator’s costs would "flex with revenue".
EasyJet says it will resume operations in line with government and medical advice, and following consultation with the European Aviation Safety Agency and International Civil Aviation Authority.
Measures will include mandatory wearing of masks for customers, cabin crew and ground crew; enhanced aircraft cleaning and disinfection; provision of disinfectant wipes and hand sanitiser onboard; and no onboard food service.
Reacting to the announcement, Brian Strutton, general secretary of pilots union Balpa, said: "EasyJet staff will be shocked at the scale of this announcement and only two days ago staff got a ‘good news’ message from their boss with no mention of job losses, so this is a real kick in the teeth.
"Those staff have taken pay cuts to keep the airline afloat and this is the treatment they get in return.
"EasyJet has not discussed its plans with Balpa so we will wait and see what impact there will be in the UK.
"But given easyJet is a British company, the UK is its strongest market and it has had hundreds of millions in support from the UK taxpayer, I can safely say that we will need a lot of convincing that easyJet needs to make such dramatic cuts.
"Indeed, easyJet’s own projections, though on the pessimistic side, point to recovery by 2023, so this is a temporary problem that doesn’t need this ill-considered knee-jerk reaction.”