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EasyJet CEO: Brexit had an impact on staff hiring
Brexit is to blame for some of the staffing problems that have caused air travel disruptions this year, according to easyJet’s CEO.
Johan Lundgren has told LBC Radio that the task force is now smaller, meaning some potential recruits are not available right now.
Before Brexit and before the pandemic, around 40% of applications to work for easyjet at Gatwick and in the London area were from non-UK nationals, mainly EU nationals.
Today this number is 2.5%. Lundgren explains, adding;
You can’t say that Brexit has no impact… obviously the pool is much smaller.
Johan Lundgren, CEO of easyJet, is now live @LBC. He insists they are “back to 2019 performance levels”.
Asked by @NickFerrariLBC which he blames for delays and cancellations, he says “everyone has a role to play” and praises Heathrow for limiting passengers “early on”.
— Charlotte Lynch (@charlotterlynch) July 26, 2022
Shares in easyJet have fallen in early markets (0.8%).
They have fallen by more than a third so far this year as the war in Ukraine drove up energy costs, making flights more expensive and leaving consumers with less to spend.
EasyJet says its July operations have “improved greatly” after it cut some flight capacity due to restrictions at London Gatwick and Amsterdam Schiphol.
Johan Lundgren, easyJet The Chief Executive says to the shareholders:
“Delivering to customers this summer remains our highest priority.
During the quarter we carried seven times more customers than the same time last year and operated 95% of our schedule. We have taken action to build the additional resilience needed this summer and the operation is now back to normal.
Customers will be fervently hoping Lundgren rightly so, as staff shortages and rising demand led to delays and cancellations this year (and cost easyJet £133m).
EasyJet takes a £133m hit from summer travel disruption as staff shortages and soaring demand wreak havoc across the aviation industry https://t.co/ipi9SYCO81
— Bloomberg UK (@BloombergUK) July 26, 2022
Heathrow chief executive John Holland-Kaye claims some passengers claim to be disabled to be “fast-tracked” through the airport, which is causing delays to the wheelchair assistance service. #LBC
— Rachael Burford (@RachaelBurford) July 26, 2022
Heathrow CEO: ‘Strange’ to be blamed for ground operator shortages
John Holland-Kaye also hit back at criticism from Ryanair yesterday that airports botched ‘their job’ of employing enough security staff and ground staff for the summer rush.
Heathrow’s CEO tells the Today Program it is “strange” to accuse airports of not employing enough ground handlers, as they are employed by the airlines.
This is like accusing us of not having enough pilots.
John Holland-Kaye, Heathrow CEO, warns that it will take years for the airline industry to rebuild after the pandemic:
We cannot ignore that COVID has left the aviation sector deeply wounded and the coming years will need investment to rebuild capacity, with a focus on safety, customer service, resilience and efficiency.
Airlines need to recruit and train more ground handlers; airports need to capture less investment during the COVID years – at Heathrow, this means replacing the T2 baggage system and new security lanes.
And it takes a swipe at the UK’s aviation regulator for ruling that Heathrow must reduce landing charges over the next few years.
Recent months have shown that passengers value simple, fast and reliable journeys, not pennies, and the CAA should encourage the investment it will bring for consumers.”
Introduction: Losses after Heathrow and easyJet
Good morning and welcome to our regular coverage of business, the world economy and financial markets.
Despite the recovery in air travel this summer, Heathrow Airport and budget airlines easyJet both have reported losses this morning as the industry tries to give all its customers a good service.
Heathrow has posted a loss of £321m for the first six months of the year, an improvement on the £466m it lost in January-June 2021, when pandemic travel restrictions were in place.
Although passenger numbers rose to 26.1 million, compared with just 3.9 million a year earlier, Heathrow says it also faced higher costs. It is not planning to pay a dividend to its shareholders for 2022 (a smart move, given the delays and lost luggage suffered by some passengers this year).
Heathrow claims the summer getaway is “off to a good start”, despite having to impose a cap on passenger numbers to avoid further travel chaos.
She insists she started planning nine months ago for the summer peak and that her resources are “on track”.
We have hired 1,300 people in the last 6 months and will have a similar level of security resources by the end of July as before the pandemic
Instead, Heathrow points the finger at airlines for problems, such as the mountain of lost luggage it created last month. He estimates that they have only 70% of airline ground operators compared to pre-pandemic levels, due to cost-cutting in the pandemic.
In the second half of June, as the number of departing passengers regularly exceeded 100,000 per day, we began to see a worrying increase in unacceptable levels of service for some passengers; an increase in delays to board planes on foot, bags not traveling with passengers or being delivered too late to the baggage hall, poor departure punctuality and some flights being canceled after passengers had boarded.
London Heathrow Airport made a pre-tax loss of £321m in the first half of 2022.
Revenues increase, but cost increases catch up.
– Nawied Jabarkhyl (@NawiedJabarkhyl) July 26, 2022
Rising costs and cancellations hit the budget airline Easyjet’s the end too. It posted a pre-tax loss of £114m for April-June, including a £133m loss due to disruption and canceled flights.
This is a better performance than the £318m loss in the same quarter last year.
EasyJet – one of the most struggling airlines – flew 22 million customers in the last quarter, up from 3 million a year earlier, and says:
Unprecedented growth throughout the aviation industry, coupled with a tight labor market, has resulted in widespread operational challenges culminating in higher-than-normal levels of cancellations.
These cancellations mean easyJet operated 95% of its scheduled schedule in the third quarter, with some customers seeing their flights canceled at the last minute.
.@easyJet reports a total pre-tax loss of £114m for the third quarter in a trading update, compared with £-318m last year.
Revenue £1.755bn vs £213m in April-June 2021.
Cost £1.869bn (£531m), reflecting a higher level of capacity, £133m disruption costs, £36m balance sheet revaluations— Richard_on_aviation (@rschuur_aero) July 26, 2022
Also coming today
of International Monetary Fund is expected to cut its global growth forecasts for 2022 and 2023 today when it publishes its updated World Economic Outlook.
Last week, IMF chief Kristalina Georgieva warned that the war in Ukraine had put more pressure on commodity and food prices, while global financial conditions were tightening more than expected and global supply chains were still struggling.
European energy ministers will meet today in Brussels to discuss proposals to cut their gas use by 15% from August to March, with some countries negotiating exemptions or softer rules.
Some governments, such as Spain, had an overall opposing target, although news yesterday that Gazprom has cut flows to Europe highlights the growing risks of shortages this winter.
Supply fears have pushed wholesale gas prices near four-month highs, meaning consumers could face even higher bills this winter.
And this morning, a group of MPs warned that the UK government must immediately provide extra support for families, or risk millions plunging into “unmanageable” debt and damaging the economy.
European share markets are set for a muted start, with the FTSE 100 headed slightly higher.
Agenda
- 11am BST: CBI distributive trading survey for UK retailers
- 14:00 BST: IMF releases updated World Economic Outlook
- 14:00 BST: US house price index for June
- 15:00 BST: US consumer confidence report for July
