/EasyJet to raise up to andpound;450m through share issue

EasyJet to raise up to andpound;450m through share issue


Published on Wednesday, June 24, 2020

 

EasyJet is to raise £400m to £450m through a non-pre-emptive placing of ordinary shares representing around 15% of its capital.

It must seek shareholder approval for a third of the placing at a general meeting on July 14.

Annoucing its financial results for the first half of the year at the same time as the share placing on Wednesday, the airline revealed that, as of Monday June 22, it had £2.4 billion in cash reserves.

It has already secured £1.7 billion of additional funding to see it through the coronavirus crisis, and it expects to receive a further £200m to £350 million from sale and leaseback transactions.

Why does it need to improve its liquidity?

The airline’s entire fleet was ground from March 30 to June 15, during which it would have burned through approximately £1 billion.

Although it resumed flights on June 15, it is currently offering only a skeleton service, mainly operating on domestic routes.

From the start of July it will increase the number of aircraft in the air to 85, building to 100 by the middle of the month and 150 during August.

However, the airline said it doesn’t expect to operate more than 30% of its previously planned flights from July to September.

“Further routes will be announced as customer demand increases and government restrictions across Europe are relaxed,” it said.

“We hope to be able to serve around 75% of our previous route network by the end of August, albeit on reduced frequencies.”

What is the future looking like?

“Booking trends on resumed flights have been encouraging, and the demand indications for summer 2020 are improving, albeit from a low base,” it said.

“Bookings for winter are well ahead of the equivalent point last year, which includes customers who are rebooking Covid-19-disrupted flights for later dates.”

Nevertheless, easyJet said it doesn’t expect a rapid bounce back in business. “In line with IATA projections, easyJet believes that the levels of market demand seen in 2019 are not likely to be reached again until 2023,” it said.

It made a £353 million loss for the six months to the end of March compared with a los of £272 million the previous year. It benefited from the collapse of Thomas Cook last September, but it saw traffic plunge during March, before eventually being forced to ground its entire fleet.

Job and fleet cuts

As part of its plans to reshape the business and cut costs, the airline is looking to shed 30% of its workforce, which will result in 4,500 job losses.

It has also deferred the delivery of new aircraft by up to five years

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