Shares in the airline easyJet PLC (LON: EZJ) have come under further pressure today as it said it would cancel flights and introduce emergency cost cuts after the coronavirus outbreak caused a drop in demand for flights especially in and out of Italy but also from further afield.
EasyJet said it would cut administrative spending; freeze recruitment, promotion and pay; and postpone non-critical capital spending. It will also offer staff unpaid leave, stop non-mandatory training and pressure suppliers for price cuts.
“While it is too early to determine what the impact of the COVID-19 outbreak will be on current year outlook and guidance for both the airline and holidays business, we continue to monitor the situation carefully and will update the market in due course,” easyJet said.
EasyJet shares have dropped by around a third in the past week as investors have been shaken by the spread of the coronavirus and health officials and economists warning of the fallout from a potential pandemic.
In northern Italy universities, schools and businesses have shut down, which is suffering one of the biggest coronavirus outbreaks outside Asia. Showing just how scared other European countries are, the Geneva Motor Show has been cancelled as Switzerland banned all “public and private” events involving over 1000 people to prevent the spread of coronavirus.
EasyJet has said it’s “too early” to determine what effect the virus will have on its outlook for the current year and that it will “continue to monitor the situation carefully and will update the market in due course”.
Travel groups such as easyJet and TUI have been particularly hard hit by the virus as travellers increasingly opt to stay home and avoid travelling through areas that may carry the risk of infection.