European regional airlines fight for survival

Regional airline easyJet has highlighted the importance of access to liquidity as being the determining factor for the future of aviation. According to CAPA analysis, Wizz Air and Ryanair are the leading European airlines for liquidity balances.

EasyJet commented on the current challenges by stating that “European aviation faces a precarious future and there is no guarantee that the European airlines, along with all the benefits it brings for people, the economy and business, will survive what could be a long-term travel freeze and the risks of a slow recovery.”

Low-cost carriers Wizz Air and Ryanair have liquidity at 48% and 47% of revenue. On 16 March 2020, Ryanair stated that it was receiving a negative impact from the UK Government’s restrictions which has meant that most of its fleet will become grounded over the following days. It expects to decrease its seat capacity by 80% by April and reduce its costs to improve cash flow.

Facing the impact of the COVID-19 outbreak, many airlines across the continent have suspended operations by 75% to 90%, but some European governments have indicated that they will support airline companies throughout the crisis.

EasyJet has undertaken a mass of cancellations which are to continue and could result in the majority of its fleet becoming grounded. Additionally, it is cost cutting to prevent non-critical expenditure and calling on government support for liquidity.

The airline’s CEO, Johan Lundgren, commented that “co-ordinated government backing will be required to ensure that the [aviation] industry survives.”