EasyJet’s (EZJ) chief executive has come under fire for refusing to suspend a £170m dividend payment while simultaneously requesting government assistance.
Defending himself to the BBC’s Nick Robinson, Johan Lundgren stated that the payment to shareholders “is going out, it was decided before all this. We are legally obliged to do it.”
When asked whether he thought it wrong to ask taxpayers for assistance before shareholders fork out, Mr Lundgren maintained: “We’re not asking for free money as such. We are asking basically for the help and support to get liquidated on a commercial term and basis.”
Trade EasyJet PLC - EZJ CFD
Airline stocks have been among the worst-affected by the ongoing Covid-19 crisis. With widespread lockdowns and border closures across Europe, easyJet’s share price has fallen more than 58 per cent in the past month alone.
With the continent’s largest regional airline, Flybe pushed into administration as a result of the novel coronavirus outbreak and Norwegian Air teetering on the edge of survival, easyJet’s request for quasi-commercial government loans could be argued to be understandable.
However, if trading continues as it has this morning then the airline could potentially no longer require government assistance. Following substantial stimulus from the European Central Bank, and the Bank of England’s decision to further cut interest rates while turning on the money printer, easyJet’s share price has surged 21.06 per cent to 614 pence.
While this is still markedly lower than its 52-week peak of 1,570 pence, such a gain could reduce the need for the airline to implement further cutbacks.
Only yesterday the company asked its pilots and cabin crews to agree to a freeze on planned pay rises, three months of unpaid leave and an end to free food during their shifts.