easyJet is just an example of such an airline cutting costs – however in this article I investigate if coronavirus was the only reason behind the cost-cutting strategy that took place, or there was another motive behind it.
All around the world, airlines are striving to put themselves in a safe financial position due to the ongoing coronavirus pandemic. From staff redundancies and retiring planes to the closure of bases; each airline is taking their own approach to ensuring economic security post pandemic. easyJet is just an example of such an airline cutting costs – but is the process behind it all that it seems and just a way out of this crisis; or is there another motive behind it?
In April 2020, easyJet secured a £600 million loan from the UK government using the emergency coronavirus fund scheme. In addition to this, and to strengthen finances, the company sold six Airbus A320neos through a $255 million sale and leaseback agreement.
While one would assume that these were the only steps that would be taken – as this was already different approach compared to other airlines facing base closures and staff redundancies – the airline would join the multitude of others by announcing the consultation of closures for three bases (Stansted, Southend and Newcastle). In turn, this put 1,300 crew jobs at risk along with over 700 pilots.
Since 2016, the UK has seen historical changes unlike any seen in modern times. This started with the famed ‘Brexit’ referendum on 23rd June 2016 and on 31st December 2020, the country will cease all ties with the European Union – including the European Union Aviation Safety Agency (EASA).
Prior to the referendum vote, the founder of easyJet – Stelios Haji-Ioannou – announced to the press that he feared Britain leaving the European Union would make cheap flights more expensive and restrictions would mean that there was less competition. Now that the exit date is looming on the horizon, and that we are currently in the middle of a crisis unlike any other – one must wonder if the decisions made by easyJet are to just put themselves in a safe financial position, or that there are more reasons to it.
This article came about after having a phone call with a former pilot for easyJet, and from his own opinion he was shocked that there could be a closure of three bases along with the redundancies of over 700 experienced pilots – however from a business point of view, a lot of the cost-cutting strategy did make sense.
Since its inception, easyJet has massively expanded into the European market through the single aviation market and ECAA (European Common Aviation Area) and would no doubt want to keep strong ties with the world’s most liberalised aviation market. Upon the announcement of the consultation of closures for three bases within the UK; the airline also said that they would keep the slots for European crews to operate in and out of, but not act as a base for its own flight crews.
While the decisions made for the cost-cutting strategy for the coronavirus pandemic have been questioned and met with negativity by BALPA and other unions, there is ultimately a strategy behind it – an acceleration for the airline to help prepare itself for the full force of Britain leaving EASA. So can it be described as a ‘stabbing in the back’ for Britain, the country which the famed low-cost airline originated from? Only time will tell if any further drastic cost-cutting decisions are made involving redundancies and base closures within the UK.
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