EasyJet to raise £450m through share sale
Carrier will also conduct £350 million sale-and-leaseback deal on aircraft to grow cash pile
Low-cost airline EasyJet will raise as much as £450 million (Dh2.05bn) in a share sale, padding its cash coffers as the carrier gears up for a European aviation restart.
The stock offering, equal to almost 15 per cent of its existing share base, will strengthen the balance sheet and increase liquidity, the company said on Wednesday in a filing. After the share sale and an up to £350m sale-and-leaseback transaction for its aircraft, EasyJet said it will have more than £3bn of cash.
The costly task of emerging from hibernation is just the latest challenge for EasyJet and its peers that have been hunkered down for months because of the coronavirus lockdown.
Britain’s biggest discount airline became one of the first European carriers to begin building up services again, and it said on Wednesday that its cash burn was slightly better than it expected because more customers are opting to take vouchers instead of asking for refunds. EasyJet is restarting with mainly internal flights in the UK and France.
Its bid to counter the impact of the virus has been further complicated by feuding with EasyJet’s founder and largest shareholder, Stelios Haji-Ioannou, who has used the crisis to press a long-held demand for the airline to cancel a large aircraft order with Airbus. Last month, EasyJet fended off an effort by Haji-Ioannou to oust top management.
About one-third of the new placement will be subject to another shareholder vote, EasyJet said. It plans to hold the meeting around July 14.
Haji-Ioannou couldn’t immediately be reached for comment on the share sale. He had previously called on the company to raise £600m in equity through a rights issue to existing shareholders, although he said that he would only consider participating if the jet order was cancelled.
EasyJet shares fell 6 per cent at the close of trade in London and are down 48 per cent this year.
With Covid-19 infection levels on the decline in most of Europe, governments have been easing travel restrictions. Holiday spots including Greece, Spain and Portugal are seeking to win back passengers. Airlines are likewise trying to salvage the tail end of the summer season when tens of millions of people generally take their vacation.
The UK may also relax its controversial quarantine requirements for incoming passengers as early as next week, with the adoption of so-called air bridges.
EasyJet said revenue increased a 1.6 per cent in the first half, while reporting a pretax loss of £353m, including a £160m charge for fuel hedges. The carrier said it wasn’t possible to provide guidance for the remainder of the financial year, due to the coronavirus pandemic.
BNP Paribas and Credit Suisse are joint global coordinators for the share sale, which will begin immediately, the carrier said.
Updated: June 24, 2020 10:02 PM