EasyJet to cut up to 30% of workforce, shrink fleet amid Covid-19 crisis

Time for a market update.

All major stock markets across Europe are continuing to trade in positive territory, though not as strongly as earlier this week.

European indices continue to trade in positive territory.

European indices continue to trade in positive territory. Photograph: Tail1/Refinitiv

Meanwhile, Wall Street looks set for a mixed open, bucking the upward trend on the other side of the Atlantic.

Here’s how futures are faring:

  • Dow Jones futures are up +0.3%
  • S&P 500 futures are flat
  • Nasdaq futures are down -0.5%

HSBC and StanChart shares hit by Hong Kong tensions

HSBC and Standard Chartered are two of the worst performing stocks on the FTSE 100 today.

The worst-performing stocks on the FTSE 100 on Friday.

The worst-performing stocks on the FTSE 100 on Friday. Photograph: Tail1/Refinitiv

The banks, which conduct a significant amount of their business in and around Hong Kong, have been knocked by renewed tensions in the region after China approved a controversial national security law that aims to bring Hong Kong further under Beijing’s control.

China’s strengthening grip on the semi-autonomous region prompted the US to announce it would no longer consider Hong Kong as separate from mainland China. It could have a serious impact on the Hong Kong economy and could threaten the prosperity of its its financial sector, if it is hit by sanctions as a result of the move.

It is just the latest crisis to impact lenders like HSBC and StanChart, having weathered last summer’s democracy protests in Hong Kong, and the Covid-19 pandemic which has hit key markets in Europe, Asia and the US.

HSBC is down today but still holding above lows seen in 2009.

HSBC’s share price over the past decade.

HSBC’s share price over the past decade. Photograph: Tail1/Refinitiv

Newsflash: RBS is to refund customers £2.2m after failing to alert new adult account holders that they were about to dip into unauthorised overdrafts.

The Competition and Markets Authority said there were effectively two breaches:

  • RBS failed to enrol about 179,000 youth account holders into the alert programme within 10 days of migrating them to adult accounts
  • As a result, RBS charged around 36,000 customers for going into (or attempting to go into) unarranged overdraft without first sending an alert

In a letter to RBS (published here) the CMA expresses its “disappointment” in the bank for the mistake. However, the lender will now refund customers for unfair treatment, with 8% interest. RBS will also “consider any reasonable claims for extra costs suffered as a result of the charges,” the CMA said.

Separately, the CMA announced that a Santander had put aside £17m for six previously disclosed breached of the retail banking order.

It brings the total customer refunds secured through the CMA for overdraft alert breaches over the past two years to £47m.

Dataflash: Eurozone consumer confidence somewhat improved in May (though it’s all relative at this point).

The European Commission said consumer sentiment came in at -18.8 this month, slightly better than the -22 reading in April.

Economic sentiment also rose to 67.5 from 64.9 a month earlier.

Pret a Manger will reopen a further 204 of its shops for takeaway and delivery on 1 June, taking the number its has reopened to 300.

The coffee and sandwich chain is reopening branches in towns and cities including Bath, Bournemouth, Newcastle, Exeter and Liverpool, for the first time since they temporarily closed in March.

When the shops reopen, they will offer a limited menu of sandwiches, salads and hot and cold drinks.


Hello again👋

On Monday we’ll have 300 shops reopened for takeaway and delivery across the UK, including in Newcastle, Liverpool and Bath. Find out where we’re reopening: https://t.co/b78ccbb1lK

A huge thank you to our amazing teams.

With love,

Pret pic.twitter.com/I4nCXBJSih

May 28, 2020

The company says it will restrict the number of customers entering each shop at any time, and that it has introduced social distancing measures its kitchens and has installed perspex screens at the till counter.

Expecting more people to continue working from home, Pret has brought out a retail range of coffee to make and drink at home, as well as son “heat me at home” soups for customers to take-away with them.

Pano Christou, Pret’s chief executive said:

It’s going to continue to be tough for Pret in the months ahead, and I’d like to thank our team members who are returning to work and making reopening possible.

24% of businesses to re-start trading next month – ONS

The Office for National Statistics has issued its latest Covid-19 economic indicators linked to the coronavirus outbreak.

Here are some of the main stats from surveys collected earlier this month, laying bare the cash squeeze many businesses are facing:

  • 42% of responding businesses had less than six months of cash reserves
  • 4% of responding businesses had no cash reserves
  • 79% of responding businesses had applied for the Coronavirus Job Retention Scheme. Around 27% of the workforce in these businesses had been furloughed

Some businesses that temporarily ceased trading are now reopening:

  • Of businesses who responded as trading, 8% said they had started trading again in the last two weeks
  • 24% of businesses who have currently paused trading expect to start trading again in the next four weeks
  • 31% expect to start trading in more than 4 weeks’ time


Union says easyJet’s “dramatic” job cuts aren’t necessary

The British Airline Pilots’ Association (BALPA) union has hit out at easyJet’s job cut announcement this morning.

BALPA said the airline has not discussed its plans with the union and would need “a lot of convincing” that easyJet needs to make such dramatic cuts.

BALPA general secretary Brian Strutton said:

easyJet staff will be shocked at the scale of this announcement and only 2 days ago staff got a ‘good news’ message from their boss with no mention of job losses, so this is a real kick in the teeth. Those staff have taken pay cuts to keep the airline afloat and this is the treatment they get in return.

easyJet has not discussed its plans with BALPA so we will wait and see what impact there will be in the UK. But given easyJet is a British company, the UK is its strongest market and it has had hundreds of millions in support from the UK taxpayer, I can safely say that we will need a lot of convincing that easyJet needs to make such dramatic cuts.

Indeed, easyJet’s own projections, though on the pessimistic side, point to recovery by 2023, so this is a temporary problem that doesn’t need this ill-considered knee-jerk reaction.

Mark Sweney

The owner of the Daily Mail, the i and Metro said that its portfolio of titles saw print advertising revenues plunge by 70% in April and May as the coronavirus lockdown hammers the newspaper industry.

Daily Mail & General Trust, which also owns Mail Online and the Mail on Sunday, said that total revenues across its consumer media division were down a third in April.

In April, DMGT said that circulation revenues fell 17% with total advertising revenue down 46% – with print ads down 69% and digital advertising falling 16%.

The first four weeks of this month, to 24th May, have fared little better with total revenues down 30%. The decline in circulation revenues has improved to a 9% fall, with total advertising revenue down 45%. Print advertising remains down 70% with digital advertising falling 17%.

Newspaper publishers have benefited from record digital audiences as readers crave news on the coronavirus. But with businesses shutdown and many advertisers keen to steer clear of running promotions around content relating to the health pandemic, publishers have failed to reap the benefits of an ad boost.

More news from the travel sector this morning, this time from Stagecoach.

The bus and train operator has set its earnings guidance for the year to 2 May 2020 to between 12.5p and 14.0p. (We’ve asked for the previous guidance but are waiting for confirmation)

It came as the group revealed that sales as its regional bus hubs are just 17% of what they were a year ago.

The publication of full year results will now be delayed until late July.

Parked busses are seen at a Stagecoach depot in South Shields.

Parked busses are seen at a Stagecoach depot in South Shields. Photograph: Lee Smith/Reuters

Stagecoach said it had tapped UK assistance programmes and issued £300m of commercial paper through the government and Bank of England’s COVID-19 Corporate Financing Facility (CCFF). It said its financial cushion had grown, with available cash and undrawn loans now worth £800m.

Stagecoach chief executive Martin Griffiths said:

We see a lasting effect of the COVID-19 pandemic on travel patterns with an acceleration in trends of increased working from home, shopping from home, telemedicine and home education. We anticipate that it will be some time before demand for our public transport services returns to pre-COVID levels and we are planning for a number of scenarios.


On top of job cuts, EasyJet intends to reduce costs by revising its contracts with airports and ground handling, reassessing what it spends on maintenance, as well as renegotiating what it spends on marketing, my colleague Joanna Partridge writes.

The airline also gave details of new onboard safety measures ahead of flights resuming on 15 June, including the mandatory wearing of face masks. The company’s fleet has been grounded since 30 March.

You can read the full story here:

EasyJet chief executive Johan Lundgren has been speaking to journalists this morning to explain the rationale behind its Covid-19 strategy.

He said the budget airline has no plans to raise equity today, but will keep that option on the table if needed.

Lundgren also warned that EasyJet could be forced to close some of its bases, but is currently in talks with airports to optimise its network, Reuters reports.

In a statement released earlier this morning, the chief executive said:

We realise that these are very difficult times and we are having to consider very difficult decisions which will impact our people, but we want to protect as many jobs as we can for the long-term.

We remain focused on doing what is right for the company and its long-term health and success, following the swift action we have taken over the last three months to meet the challenges of the virus. Although we will restart flying on 15 June, we expect demand to build slowly, only returning to 2019 levels in about three years’ time.

Against this backdrop, we are planning to reduce the size of our fleet and to optimise the network and our bases. As a result, we anticipate reducing staff numbers by up to 30% across the business and we will continue to remove cost and non-critical expenditure at every level. We will be launching an employee consultation over the coming days.

We want to ensure that we emerge from the pandemic an even more competitive business than before, so that easyJet can thrive in the future.

Travel stocks and investment groups help prop up FTSE 100

EasyJet is among the biggest risers on the FTSE 100, having started the session around 4.2% higher before falling back to around 2.6%.

We’ll see whether investors will continue to buy in to the companies plans throughout the session.

Meanwhile, M&G is getting a strong reception after the fund manager and insurance group said it would keep its dividend intact. It goes against the grain, with most UK insurers heeding the Bank of England’s warnings to scrap investor payouts during the Covid-19 crisis.

A list of the top 10 stocks on the FTSE 100 on Thursday morning.

A list of the top 10 stocks on the FTSE 100 on Thursday morning. Photograph: Tail1/Refinitiv

Investors in Europe are again shrugging off tensions in Hong Kong, extending an upward run on stocks since Tuesday.

Here’s now major indices have opened:

  • FTSE 100 up 0.8%
  • FTSE 250 up 0.9%
  • France’s CAC 40 up 0.6%
  • Spain’s IBEX up 0.6%
  • Germany’s DAX up 0.7%


Introduction: EasyJet to cut up to 4,500 jobs

Good morning and welcome to our rolling coverage of the world economy, the financial markets, eurozone and business.

EasyJet has laid out fresh cost cutting plans that will involve axing up to a third of its 15,000-strong workforce in response to the Covid-19 crisis. EasyJet said its fleet will also involve 51 fewer aircraft than expected by year-end 2021.

The move, which will impact up to 4,500 staff, is being announced just weeks before it is set to re-start some flights (primarily domestic routes in the UK and France) on 15 June.

The budget airline said it is preparing itself for a prolonged drop in bookings, citing projections by the International Air Transport Association (IATA). IATA has said levels of demand last seen in 2019 are unlikely to be reached until 2023.

Elsewhere, markets were mixed in Asia, after the US announced that it no longer views Hong Kong as autonomous from China. It comes as China prepares to impose a new security law that would drastically limit civil liberties in the territory.

The US declaration could have a serious impact on the Hong Kong economy, particularly if its financial sector is hit by sanctions as a result of the move. It sent the Heng Seng down 0.57% in trading on Thursday.

The agenda

  • 10am BST: Eurozone business confidence for May
  • 13.00pm BST: German HICP and CPI inflation (preliminary reading) for May
  • 13:30pm BST: US weekly jobless claims, and second estimate of Q1 GDP

Read More

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