EasyJet grounds fleet as virus pushes airlines to the brink

Easyjet planes are seen parked at Luton airport after Easyjet announced it has grounded its entire fleet, as the spread of the coronavirus disease (COVID-19) continues, Luton, Britain, March 30, 2020. (REUTERS/Matthew Childs)
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Updated 31 March 2020

EasyJet grounds fleet as virus pushes airlines to the brink

  • EasyJet was under additional pressure from its biggest shareholder, Stelios Hajji-Ioannou, who along with his family owns about a third of its shares

LONDON: British budget airline easyJet has grounded its fleet of 344 planes and has no clear idea when it might resume flights, it said on Monday, highlighting the strain on airlines trying to survive the coronavirus pandemic.
EasyJet said it would lay off its 4,000 UK-based cabin crew for two months, meaning they won’t work from April 1 but will get 80 percent of their average pay under a state job retention scheme.
The global health crisis has brought European air travel to a standstill, leaving airlines with no revenue and facing a struggle for survival. Small British airline Loganair, for example, said on Monday that it would seek state support.
Shares in easyJet lost as much as 10 percent in early trading, having halved in value over the last month. The airline now has a market capitalization of about £2.3 billion ($2.9 billion).
“We think the group has enough liquidity to manage a short suspension of European air travel but if the disruption proves prolonged, or the recovery is sluggish, easyJet could be in real trouble,” said Hargreaves Landsdown analyst William Ryder.
EasyJet was under additional pressure from its biggest shareholder, Stelios Hajji-Ioannou, who along with his family owns about a third of its shares.
In a letter to easyJet’s chairman, Hajji-Ioannou said it must cancel or renegotiate a £4.5 billion order for 107 Airbus planes because the extra aircraft would just destroy shareholder value.
EasyJet said it was trying to reduce payments, including those on aircraft, and would respond to the letter privately.
The airline said it was focused on short-term liquidity, including removing costs from the business and working with suppliers to defer and reduce payments where possible.
It said grounding its fleet removed significant costs and that it was continuing to talk to UK pilots union BALPA over a potential deal with pilots.
“We are working tirelessly to ensure that easyJet continues to be well positioned to overcome the challenges of coronavirus,” easyJet CEO Johan Lundgren said in a statement.
Hajji-Ioannou has told the airline to try to raise money from shareholders, and offered to participate himself.
Management could face disruption if it does not address his worries over the Airbus order, which is due to be paid between 2020 and 2023, as he has threatened a rolling general meetings to try to remove board members.
For easyJet cabin crew looking for something to do, Britain’s National Health Service has asked them to volunteer at hospitals being set up to cope with the thousands of coronavirus patients expected in the coming weeks. Crew have first aid training and security clearance, making them ideal candidates.
EasyJet said it was focused on using UK government measures already announced to help its finances during the coronavirus crisis and has no plans to ask for any bespoke support.
Some UK airlines had been hoping for a specific state aid package but the government said last week it would only consider stepping in once carriers had exhausted all other options, such as raising capital from existing investors.
On Monday, small regional British airline Loganair, which flies between remote Scottish islands and the mainland, said it was planning to ask the government for support, having already asked its owners for help.
“I do think that like the vast majority of UK airlines we will be going back to take up that invite for further conversation with the Treasury in the coming days because we have to,” said Loganair CEO Jonathan Hinkles.
Virgin Atlantic has already requested state aid, asking for a package of commercial loans and guarantees worth hundreds of millions of pounds, according to the Financial Times.


American farmers worry as crop prices dip amid corona outbreak

Updated 5 min 38 sec ago

American farmers worry as crop prices dip amid corona outbreak

  • Farmers growing corn and soy — the biggest crops in the world’s largest economy — were hoping for a turnaround this year

MOUNT AIRY: Dave Burrier steered his tractor through a field, following a GPS map as he tried to plant as much corn as possible amid the yellow and green rye covering the ground.

Striving to get a massive yield out of his crops in rural Maryland is how Burrier hopes to make it through yet another uncertain year, beset by market disruptions caused by the COVID-19 pandemic and renewed trade tensions between the US and China.

“We’ve had so much price erosion that we’re basically at below the cost of production. We’ve got to figure out how to manage and turn a profit,” Burrier said. “That’s harder than planting this corn.”

American farmers growing corn and soy — the biggest crops in the world’s largest economy — were hoping for a turnaround this year after Washington and Beijing reached a truce in their months-long trade war, which included a pledge to buy more US agricultural goods.

But the coronavirus hit before the benefits of that deal could be felt, disrupting transportation and operations at slaughterhouses, sapping demand, while the global oil price crash closed the ethanol and biofuel plants that could have picked up the slack.

“It’s kind of glum,” said Dave’s wife Linda Burrier, a soybean farmer who serves on the United Soybean Board, the crop’s governing body in the US. Yet she remains guardedly optimistic.

“Farmers are one of the most faithful people there are,” she said. “You put a seed in the ground, you expect to get a crop out of it.”

Facing a supply glut, the US Department of Agriculture projects the average farm price for corn will to drop to its lowest level in 14 years in the 2020-2021 growing season. Soybean prices also are expected to fall. And a study from the University of Illinois and Ohio State University earlier this month predicted that even with payments from government safety net programs, corn and soybean farmers are facing total revenue losses of $8.5 billion to $10.2 billion amid the pandemic.

President Donald Trump’s administration spent $28 billion in 2018 and 2019 to help farmers hurt by the trade war, and pledged another $16 billion this year to offset the market disruptions.

Dave Burrier said the current conditions are a grim echo of the 1980s — a decade he would prefer to forget — when a combination of low commodity prices, heavy debt burdens and a grain embargo against the Soviet Union ruined American farmers. “It gives me a chill to talk about it,” he said.

Plenty has changed in the more than four decades Burrier, 67, has been farming.

Computer monitors in his tractor display detailed metrics to track his planting, replacing the pen and notebook his father relied on.

The Soviet Union is gone, but US farmers once again are partly at the whim of a foreign power.

China retaliated for Washington’s unilateral trade actions with crippling tariffs on US soy that drove a steep drop in total US agricultural exports to $9.2 billion in 2018, less than half the 2017 amount, according to government data. Exports recovered to nearly $14 billion last year.

In the “phase one” deal reached in January, Beijing agreed buy up to $50 billion in US farm products. But with Trump accusing China of covering up the origins of the coronavirus, fears are rising that the deal will fall victim to the acrimony.

“Agriculture in America is very vulnerable right now, but if we have a good growing season we should be able to get through this year,” said Arlan Suderman, chief commodities economist at INTL FCStone.

Danielle Bauer, executive director of both the Delaware and Maryland soybean boards, said farmers in her area have stepped up exports to Taiwan and are expecting increased demand for high oleic soybean oil, a variety grown exclusively in the US.

“There is a lot of uncertainty. The farmers are bracing for a really hard year all around,” she said.

The Burriers also plant wheat and make good money selling hay to a nearby racetrack, and Dave’s corn yield last year was double the county average.

But 60-year-old Linda admits the setbacks of recent years plus the pandemic mean the couple probably will have to delay retirement.

“We’re going to have to wait, I don’t know, another 5 or 10 years, if we can, physically,” she said. “My husband’s worked really hard. I don’t know how much longer he’s going to want to keep at it.”