Easyjet raises £1.9bn but faces £380m coronavirus loss
Budget airline Easyjet said today that it had has raised £1.8bn-£1.9bn in extra cash to help it survive the shutdown caused by the coronavirus epidemic.
But it could face first-half losses of up to £380m due to travel bans associated with the coronavirus lockdown, it warned.
The airline said today that it had signed two term loans totalling around £400m which are secured against aircraft and mature in 2022.
Easyjet’s share price rose almost six per cent in early trading to 637.6p.
Easyjet said it had issued £600m of commercial paper through the government and Bank of England’s covid corporate financing facility (CCFF) and said it had fully drawn down on its $500m (£400m) revolving credit facility.
Easyjet said it continued to engage with parties interested in acquiring aircraft from Easyjet on a sale and leaseback basis with anticipated proceeds in the range of £440m-£550m.
The airline said it expected these measures to raise an additional £1.85bn – £1.95bn leaving it with a notional cash balance of around £3.3bn.
Easyjet predicted it would use around £1.2bn in cash in a three-month grounding, £2.2bn in a six-month grounding and £3bn in a nine-month grounding.
“Given the possibility of a prolonged grounding Easyjet will continue to consider further liquidity and funding options,” it said.
Easyjet said that in a prolonged grounding it could defer maintenance spending seek additional government support and make further operational and organisational changes.
However, Easyjet warned its first-half loss could land between £360m and £380m, including up to £185m on fuel costs.
Johan Lundgren, Easyet’s chief executive, said: “We remain focused on doing what is right for the company for its long term health and to ensure we are in a good position to resume flying when the pandemic is over. While the vast majority of our people are not able to work at this time, there is a small number working tirelessly to help our customers, and to plan for our return to the skies, whenever that might be”.
Easyjet shares rose 4.4 per cent in early trading to 629p.
William Ryder, Equity Analyst at Hargreaves Lansdown: “This lockdown is going to really hurt Easyjet, and badly damage the balance sheet going forward.
“However, if the fleet can get back into the air this year the group looks like it will probably survive, and investors will welcome at least that degree of certainty.”
Helal Miah, investment research analyst at the Share Centre, said: “The carrier is demonstrating its survivability to investors in these extreme circumstances and we’re somewhat assured that it’s a more viable airline than most others.
“However, despite this morning’s rally in the shares, it’s still a long way off for the pre-lockdown levels.
“While it should come out relatively well on the other side, the question is how the economy shapes up afterwards and whether spending on travel resumes to pre-lockdown levels or not.”
Easyjet’s management is currently involved in a spat with the founder of the business Sir Stelios Haji-Ioannou who is threatening legal action in connection with its purchase of aircraft from Airbus.
Easyjet has deferred the delivery of 24 aircraft from Airbus out of a total order of 103 and said it will take no plane deliveries in 2021.
Haji-Ioannou – who is the airline’s biggest shareholder – is pushing for a cancellation of the order and has threatened legal action over the issue.