Easyjet boss claims middle seats on planes could be kept empty once coronavirus travel restrictions are lifted as the airline warns of £200m loss
The boss of Easyjet says the middle seats on its planes could be kept free for a period of time once its fleet is back up in the skies and the pandemic subsides.
Chief executive Johan Lundgren said it was one of the options being considered to keep social distancing measures in place once travel restrictions are lifted.
But, Michael O’Leary, the boss of rival airline Ryanair, has always slammed the idea of keeping middle seats free on his fleet once flights resume, branding the idea ‘hopelessly ineffective.’
He’s the boss: Johan Lundgren is the chief executive of Easyjet
Claims: Easyjet says it has ‘sufficient liquidity’ to be able to withstand a lengthy fleet grounding
How will your flight look in future? You might have to be keep the middle seat free for a while
Easyjet’s Mr Lundgren said: ‘Our assumption is that load factors will not be back to normal early on, which means that we will have the opportunity for a middle-seat option but I’m talking about this as an initial phase and nobody knows for how long that phase will be.’
He added: ‘We’re also looking at various disinfection programmes on the aircraft.’
Easyjet’s entire fleet of planes has been grounded since 30 March and the majority of its 9,000-strong UK-based workforce have been furloughed until the end of May. A small number of staff remain working in ‘central functions.’
In a trading update today, Easyjet predicts its headline half-year pre-tax loss could come in between £185million to £205million. A year ago, the airline’s loss for the same period stood at £275million.
But, the budget airline claims it has ‘sufficient liquidity’ to be able to withstand a lengthy grounding of its fleet in an update today.
Easyjet said it had raised between £1.85billion to £1.95billion worth of extra cash, taken ‘decisive’ action to slash its costs and postponed plans to snap up 24 new planes.
Useless? The boss of Ryanair, Michael O’Leary claims there’s no point keeping middle seats free
FTSE-100 listed Easyjet’s share price jumped sharply this morning and is currently up 7.43 per cent or 44.8 points to 648p.
Mr Lundgren said: ‘Our first-half trading performance was very strong prior to the impact of coronavirus, which shows the strength of easyJet’s business model.
Easyjet comment on dealing with disrupted customer bookings
The airline said in its update today: ‘During the coronavirus pandemic we are providing customers with the options of changing their flights (with no change fee), receiving a voucher for the value of the booking or receiving a refund.
‘Since we introduced the online voucher option, more than half of disrupted passengers have chosen vouchers or alternative flights.’
‘Since then, I have been immensely proud of our team, right across the business, and the way they have worked through these tough times to put us in the strong position we are in now.
‘We took swift action to meet the challenges of the virus.’
Mr Lundgren said in around seven weeks the airline has launched a cost-cutting initiative which had ‘dramatically brought down our cash burn’, including grounding its entire fleet and deferring the delivery of 24 new Airbus aircraft.
The airline said its current weekly cash burn was around £30million to £40million, compared to £125million a week when running a full flight schedule.
Easyjet carried 3.9million passengers in March this year, down from 15.9million in January and 6.5million in February.
Looking ahead to the winter season, the airline said: ‘Our winter 20/21 seats were released earlier than usual, in order to allow customers to plan ahead.
‘Bookings for winter are well ahead of the equivalent point last year, and this includes customers who are rebooking coronavirus-disrupted flights for later dates.’
Michael Hewson, chief analyst at CMC Markets UK, said: ‘Easyjet shares have had a good start to this morning’s session after reporting a headline pre-tax loss of between £185m and £205m on first half revenues of £2.38bn. This is a significant improvement on last year’s £275m loss.’
He added: ‘Management declined to offer any guidance as to future expectations for this year, though they did say that bookings for winter are well ahead of the same period last year, which is probably not the reliable guide that it used to be.
‘The current disruption to consumer travel plans will probably see airlines having to redraw their entire business model, as more people stay at home in the short term, until some form of vaccine is found for this virus.
‘This is likely to mean much lower annual revenues in the short to medium term until consumer confidence returns and social distancing restrictions allow.’