EasyJet to cut 4,500 jobs to stay competitive after crisis

EasyJet expects a depressed market for air travel in the immediate future, and is looking to cut the size of its fleet accordingly. (Reuters)
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Updated 29 May 2020

EasyJet to cut 4,500 jobs to stay competitive after crisis

  • UK budget airline expects a smaller market in future after easing of lockdown travel measures

LONDON: The UK’s easyJet plans to cut up to 4,500 jobs and shrink its fleet to adjust to the smaller travel market which is forecast to emerge from the coronavirus crisis.

EasyJet, which employs more than 15,000 people in eight countries across Europe, is moving later than others in announcing job cuts as a result of the coronavirus pandemic, which has brought airlines across the world to their knees.

Most have been forced to cut jobs, including more than 15,000 in Britain, as they prepare for a market which is not forecast to return to 2019 levels until 2023.

EasyJet, which said on Thursday it would launch a consultation process with staff, also plans to shrink its fleet by 15 percent to 302 planes by the end of 2021 and to cut costs through deals with airports, suppliers and in marketing.

Shares in easyJet rose 6 percent to 751 pence, their highest level since mid-March, before coronavirus grounded its fleet.

“Exactly the kind of overhaul the cost base needs,” Bernstein analyst Daniel Roeska said of easyJet’s cuts, which go deeper than those of Ryanair and Wizz Air, who have said they will lay off 15 percent and 19 percent of staff respectively.

EasyJet said it expects to be flying around 30 percent of its capacity by the fourth quarter, which leaves it trailing Ryanair which is planning to fly 40 percent in July.

“The leverage to growing market share over the next two years seems to rest with Ryanair and Wizz, who see their cost bases as allowing them to exploit this crisis,” Goodbody analyst Mark Simpson said.

EasyJet Chief Executive Johan Lundgren said that job cuts would ensure easyJet emerges as “a more competitive business.” Around 8,000 of its staff are based in Britain.

Lundgren told reporters that easyJet was talking to the British government about a 14-day quarantine rule which airlines say will further stifle any travel recovery.

Over the last six weeks easyJet has also been grappling with an attempt by its biggest shareholder to oust its senior bosses, and the fallout from a cyberattack.

It said that talks with lessors interested in acquiring aircraft on a sale and leaseback basis were ongoing, and that proceeds would now be £500 million to £650 million ($798 million), around 25 percent higher than previously expected in April. 


Saudi Arabia strengthens position as world’s largest Islamic finance market

Updated 1 min 55 sec ago

Saudi Arabia strengthens position as world’s largest Islamic finance market

  • Moody’s anticipates a shift to more Shariah-compliant finance over the next 12-18 months as corporates and households increasingly use Islamic products
  • VP-Senior Analyst at Moody’s Ashraf Madani: A comprehensive set of Islamic finance regulations have spurred Saudi banks to issue sukuk

LONDON: Islamic financing in Saudi Arabia will reach around 80 percent of system-wide loans in the next 12-18 months according to a report from Moody’s.
That compares to 78 percent of loans in the Kingdom in 2019 and 70 percent in 2013, the credit ratings agency said in a report on Tuesday.
Moody’s anticipates a shift to more Shariah-compliant finance over the next 12-18 months as corporates and households increasingly use Islamic products, even as low oil prices and the coronavirus crisis cause economic challenges.
Saudi Arabia had total Islamic finance assets of $339 billion as of March 2020, leaving Malaysia in a distant second  place with $145 billion.
“A comprehensive set of Islamic finance regulations have spurred Saudi banks to issue sukuk, Islamic products are now listed on the main market, and an Islamic mortgage refinancing businesshas been established,” said Ashraf Madani, VP-Senior Analyst at Moody’s.
The industry will further benefit from increased government sukuk issuance, potentially rising foreign investment supported by more lenient entry rules and deepening capital markets, Moody’s said.
A wave of mergers and acquisitions across the region is also accelerating the penetration of Islamic finance.