EasyJet Defers Delivery of 24 Airbus Jets to Preserve Cash
EasyJet Defers Delivery of 24 Airbus Jets in Bid to Save Cash
(Bloomberg) -- EasyJet Plc deferred the delivery of 24 Airbus SE A320-family jets that were due to arrive over the next three years as the carrier moves to protect cash amid the coronavirus pandemic.
The handovers will be postponed to an undetermined date, the British low-cost airline said in a statement Thursday. The moves will significantly reduce the low-cost airline’s capital expenses over the next three years, it said, promising to provide further details with a trading update on April 16.
EasyJet has come under intense pressure from its founder and largest shareholder, Stelios Haji-Ioannou, to cancel the entire Airbus order for more than 100 aircraft, valued at 4.5 billion pounds ($5.6 billion). The airline has instead sought to postpone deliveries, avoiding a direct conflict with the planemaker over contracts that are hard to break, and preserving its ability to resume growth once the coronavirus crisis breaks.
It’s also borrowed 1.1 billion pounds ($1.35 billion) to shore up liquidity, tapping into a U.K. guarantee program that Haji-Ioannou also opposes.
“A deferral is the same as kicking the can down the road,” Haji-Ioannou said in a statement. The airline isn’t telling investors how much it will pay for Airbus aircraft over the next six months, including with U.K. taxpayer money, he said.
EasyJet declined to comment on Haji-Ioannou’s statement. He has proposed shareholder meetings to oust Chief Financial Officer Andrew Findlay and another board member, actions that the airline has called a distraction.
Among Thursday’s moves, EasyJet will push back receipt of 10 planes that were due to be delivered by the end of its fiscal year in September, though it didn’t say how many planes it will accept. The airline won’t take any of the 12 jets it was due to receive in the following 12 months. In fiscal 2022, it deferred two deliveries and said it has the option to delay another five aircraft.
“Within the next 16 months EasyJet also has 24 operating leases due for renewal providing the airline with further flexibility, which could include deferment and cancellation,” it said.
Airlines around the world are deferring or canceling jet orders as travel bans aimed at halting the spread of the pandemic have left airlines with grounded fleets.
Aircraft manufacturers are cutting production to meet the lower demand from carriers. On Wednesday, Airbus announced that it would slash production rates by a third across its lineup.
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