Dreams grounded: Cadet pilots face uncertain
future as coronavirus turns shortage to surplus
Jamie
Freed, Allison Lampert, Heekyong Yang
SYDNEY/MONTREAL/SEOUL
(Reuters) - Mark, 34, quit his job as a town planner in London last year to
start flight-training school, buoyed by a conditional offer of employment with
budget carrier easyJet (EZJ.L) at a time when the airline industry was desperately
short of pilots.
The coronavirus
pandemic has changed all that, with carriers furloughing pilots by the
thousands and airlines including easyJet, Delta Air Lines Inc (DAL.N) and
Germany’s Lufthansa (LHAG.DE) forecasting they will be smaller for years until
demand fully returns.
“It is like
almost an entire career pulled from under your feet,” said Mark, who declined
to provide his last name due to concerns about his future prospects.
He had
expected to complete his 109,000 pound ($136,000), 18-month training programme
in December but now faces uncertainty over the timing due to lockdowns.
He remains
in the dark about whether easyJet will still need new pilots when he completes
his training or if he will be forced to look at other airlines or return to his
old career.
An easyJet
spokeswoman said the airline had instigated a recruitment freeze due to the
pandemic impact which reduced the need for new pilots.
“We are
continuing to review our pipeline of those cadet pilots set to join easyJet in
the coming months and as soon as the situation changes we plan to prioritise
roles for them,” she said.
The crisis
marks a sharp reversal from recent years when some airlines had been paying
sign-on bonuses of $25,000 to $30,000 to lure pilots, said Andre Allard,
president of Montreal-based aviation sector recruitment agency AeroPersonnel.
“We used to run after the candidates,” he said. “Now
they are running after us.”
Two years
ago, some regional airlines grounded planes for lack of pilots and carriers
such as Emirates and Australia’s Qantas Airways Ltd (QAN.AX) struggled to fully
utilise their jets because of training bottlenecks.
Now Qantas
has shelved plans to open a second pilot training school due to the
coronavirus, which has led it to ground the bulk of its fleet and place staff
on unpaid leave. Major U.S. airlines have frozen pilot hiring.
The
previous boom in pilot training could turn into a bust for schools that
invested to accommodate more students.
Thierry
Dugrippe, head of Canadian pilot training school Air Richelieu, said he expects
a decline in enrolment of 30% to 40%.
He said
students about to complete the 20-month commercial line pilot training program,
which costs C$85,000 ($61,000), are looking at what to do next.
“They are
asking a lot of questions,” Dugrippe said.
Training
provider CAE Inc (CAE.TO) said two cadet programmes at its Phoenix flight
school were suspended at the request of unnamed sponsor airlines due to
coronavirus-related travel restrictions.
TOUGH
MARKET
In Seoul, a
pilot in his 20s who had been hired as a trainee at budget carrier Eastar Jet
had his contract cancelled on April 1, alongside around 80 colleagues.
The pilot,
who declined to be named because he was concerned about getting a job in the
future, paid 150 million won ($124,000) to gain his license at a U.S. flying
school, lured by the global pilot shortage.
“A lot of
people quit their jobs and headed to aviation schools abroad to get pilot
licenses, because carriers were actively recruiting pilots at that time,” he
said.
Eastar said
it cancelled the contracts of around 80 trainees due to deteriorating financial
conditions.
Mark, the
easyJet trainee, said one of his hopes was that some pilots would take early
retirement due to the downturn, leaving openings for new hires when demand
returns.
In the
United States, up to 5,000 pilots a year could retire in the next few years,
according to Kit Darby, an aviation consultant and former pilot.
U.S. pilot
hiring could begin again in two to three years due to those retirements, he
said, but that makes it a tough market for pilots finishing their training
earlier.
Danny
Lynch, 36, who had previously worked in digital marketing, finishes a 99,000
pound, 18-month flight training course in Oxford in mid-2021 and is banking on
a quicker recovery.
“I
certainly hope that by then, the market has improved,” he said.
Those due
to finish training earlier, like Lauren, a trainee in her 30s at a British
flight school, are busy coming up with contingency plans.
Lauren, who
declined to provide her last name, does not yet know when she will complete her
course which was paused during lockdowns, nor whether airlines will be hiring
at the end of it.
For her,
options if a commercial pilot job is not immediately available could include
returning to her old corporate career and flying small planes as a hobby on the
side.
“I’m very
lucky because I do have a former career to fall back on,” Lauren said. “I have
just got to come up with contingency plans A, B, C, D.”
($1 = 0.8017 pounds, 1.3875 Canadian dollars, 1,210.7100
won)
 |
Ryanair will cut 3,000 jobs and keep 99% of
flights grounded through June
By Hanna
Ziady, CNN Business
Updated
1010 GMT (1810 HKT) May 1, 2020
London (CNN
Business)Ryanair is planning to cut up to 3,000 jobs and operate less than 1%
of flights through June after warning that passenger demand and pricing will
take at least two years to recover from the coronavirus pandemic.
Europe's
largest airline by passenger numbers said in a statement Friday that its
restructuring program will begin in July and could result in the loss of as
many as 3,000 jobs among pilots and cabin crew, or about 15% of its workforce.
Pay cuts of
up to 20% and the closure of a number of aircraft bases across Europe are also
on the cards, Ryanair (RYAAY) said.
CEO Michael
O'Leary will take a 50% pay cut for the rest of the financial year to March
2021, it added.
The news
follows a similar announcement by British Airways this week, which said it
could cut more than a quarter of its workforce, or 12,000 jobs, as the outlook
for aviation deteriorates.
Ryanair
usually operates low-cost flights to more than 200 destinations mostly in
Europe, playing a vital role in supporting smaller regional airports and the
continent's massive tourism industry.
The sector
is expected to be particularly hard hit this summer, with countries such as
Spain, Italy, France and Greece — among the world's most visited destinations —
bracing for a dramatic decline in international visitors.
The budget
carrier said it expected to carry fewer than 150,000 passengers in the April to
June period, compared with its budget target of 42.4 million. For July to
September, it now expects to carry no more than 50% of its original traffic
target of 44.6 million passengers.
"Ryanair
now expects the recovery of passenger demand and pricing (to 2019 levels) will
take at least two years, until summer 2022 at the earliest," it said,
adding that it expects to report a net loss of over €100 million ($109.7
million) in the April to June quarter, with more losses to come.
The airline
said that when it returns to "meaningful flying" from July, Europe's
competitive landscape will be distorted by more than €30 billion ($33 billion)
in what it described as "unlawful" state aid given to competitors,
including Air France-KLM (AFLYY), Norwegian Air and airlines owned by Lufthansa
(DLAKY).
This will
allow these carriers to fund "many years of below cost selling,"
Ryanair said, adding that it plans to challenge these bailouts in court because
it believes they are in breach of EU state aid rules.
|
Stelios: “Easyjet will run out of money” by August if
Airbus order is not cancelled
6 Apr 2020
by Mark Caswell
Easyjet’s
founder and largest shareholder Stelios Haji-Ioannou has again called for the
carrier’s £4.5 billion contract with Airbus to be cancelled.
The
entrepreneur said if the order is maintained “I regret to report, Easyjet will
run out of money around August 2020, perhaps even earlier”.
Easyjet
grounded its entire fleet at the end of March, stating that “At this stage
there can be no certainty of the date for restarting commercial flights”.
A statement
released by Stelios today (April 6) said:
“My main
objective is to terminate the £4.5bn contract between Easyjet and Airbus for
107 additional useless aircraft. That is the only way to preserve the value for
all shareholders and all the bondholders too.
“Easyjet’s
market capitalisation (value of all the shares) nowadays is hovering around £2
billion. The Haji-Ioannou family owns about 34 per cent of the shares but the
other 66 per cent is widely held amongst many individual shareholders and
various pension funds paying out pensions tomorrow – and years to come. I will
now seek to enlist support of these other shareholders in terminating the
Airbus contract.
“The net
book value of the assets of Easyjet (net of liabilities) was £3 billion as at
30 September 2019. Even allowing for trading losses during the current
grounding there are still many good assets inside Easyjet and we must not allow
the current directors to squander our assets by paying Airbus for these
unwanted new planes.
“Easyjet
has also borrowed c£1.3 billion from bondholders (pension fund money again)
that will need to be repaid in full over the next 2-5 years. Today these bonds
are trading at 20-30 per cent discount to their original value which means the
market feels that Easyjet may become insolvent in that timeframe all the time
whilst paying Airbus c £1.35 billion for new aircraft in the next few months
(the same value as all the bonds outstanding today).”
Stelios
said that the prediction for running out of money around August “is based on
the optimistic forecast published by the house stockbroker of easyJet (Neil
Glynn at Credit Suisse on April 2, 2020) showing a cash short fall (negative balance)
of £164m by September 2020”.
He added
that the forecast was based on “wildly optimistic assumptions that the Easyjet
fleet will return to the skies in June, bringing in profitable revenues of
£1.5bn in the summer months” – something which Stelios referred to as “pure
fantasy”.
“It must be
noted that almost every country in Europe has now closed its borders to
foreigners,” said Stelios. “Nobody really knows when they will open again. And
even then, nobody believes that people will be willing to undertake foreign
travel in such large number by June 20”.
“Fear has
now taken over human behaviour when it comes to any form of foreign travel.
Each country will want to keep others out for much longer than the date that
their own local national lockdown ends. I think that Easyjet at the end of
national lockdowns will feel more like a start-up trying to find a few
profitable routes for a few aircraft at a time. How many Brits will want to fly
to northern Italy or Spain on holiday this June? Not many I think.”
Stelios
said he was calling for two directors to be removed from the Easyjet board,
including CFO Andrew Findlay.
“If Easyjet
terminates the Airbus contract, then it does not need loans from the UK
taxpayer and it has the best chance to survive and thrive in the future with
some injection of additional equity provided for by the markets (pari passu to
the existing shareholders),” said Stelios.
“But if
Easyjet stumbles along whilst taking UK taxpayers money as loans only to pass
it on to Airbus, it will have to raise fresh equity anyway in the next 3-6
months – reducing the value of our current shareholdings to close to zero.
“In any
event no rational investor would be buying new shares in Easyjet if the money
will be used by easyJet to pay £4.5bn to Airbus for new planes it simply does
not need. I will certainly not be throwing good money after bad. For the
avoidance of doubt, I will not inject any fresh equity in Easyjet whilst the
Airbus liability is in place.”
Business
Traveller has contacted Easyjet regarding today’ statement, and will post any
response
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