easyJet CEO Says Bailouts Are Distorting The Market

Advertisement:

easyJet’s CEO Johan Lundgren has spoken out about the lack of support given to the UK’s aviation industry by the British government. He says that, while he welcomes the extension to the furlough scheme, the industry needs more assistance if it is to keep up with the rest of the world. He believes that, given the billions in bailouts received by some of easyJet’s continental competitors, the future market risks being distorted with unfair competition.

easyJet
easyJet’s CEO has spoken out about the huge bailouts some of his competitors have received. Photo: Getty Images

Risking the future market

Around the world, the response to the disruption caused by the COVID-19 pandemic has been widely varied from country to country. While Germany saw fit to bail Lufthansa out by almost $10 billion

Another carrier that has been left largely high and dry is the UK’s easyJet. Although the airline availed of the government’s furlough scheme and sought assistance in the form of a £600 million loan, it was small change in comparison to what some of its competitors have been receiving.

The company has been left to cut bases, shrink its workforce, and sell shares and planes to stay afloat. Speaking at last week’s World Aviation Festival, easyJet CEO Johan Lundgren warned that the varying levels of bailout risk distorting the market going forward. He said,

“The different types of support that governments have been giving out to airlines in in Europe, in the sums of billions, risk distorting the market.”

When asked if he was against state aid in general, something that fellow low-cost carrier Ryanair has made clear its stance on, Lundgren was quick to say he was not. He noted that it was more the unfair distribution of such support that was damaging the future market. He said,

“I’m not against support from the governments. What is not acceptable is that it’s so unevenly distributed.

“Take easyJet as an example. Going into this crisis we were one of the world’s financially strongest airlines. And because we are not in that we were not in desperate need. We have the funds to survive, so we’ve not been seen as a case who is in need of support.

“The same goes for a number of other companies also in the UK. Where billions have been poured into other airlines, that distorts the market and that distorts future competition. That’s what I’m against.”

easyJet Johan Lundgren
The CEO warns that future competition will be distorted. Photo: Getty Images

Furlough extension is not enough

The same day Lundgren was making his comments, the UK government had just agreed an extension to the furlough scheme. Specifically, chancellor Rishi Sunak said that those with ‘viable’ jobs would be supported, although to a lesser degree than the previous scheme. This may have played a part in easyJet’s subsequent agreement with BALPA to avoid pilot redundancies.

Advertisement:

Stay informed: Sign up for our daily aviation news digest.

Lundgren said that, while he welcomed the extension of the furlough scheme, he still didn’t feel the UK government had done enough to support the industry. He said,

“Whilst it is positive that there is some type of support, what is disappointing is that there’s nothing that is specific to the sector … Things that we’ve been talking about include removal of APD and removal of ATC charges. That would give us some confidence in planning for next year, never mind this winter.”

easyJet
The airline has been calling for the removal of APD charges and other measures to support the sector. Photo: easyJet

He warned that the proposed support outlined in Sunak’s autumn budget was too little and much too late. He further said that, without serious support from the government, the UK aviation industry risks falling behind the rest of the world. He commented,

Advertisement:

“The UK aviation industry is one of the leading in the whole of the world. I fear that, unless there is the support and action and contribution, it will fall behind other countries, and that surely cannot be in the interest of the UK Government.”

What do you think about the easyJet CEO’s comments? Has the UK government done enough to support its airlines? Let us know in the comments.

Advertisement: