EasyJet raises $520m through share placing to bolster virus-hit finances
Budget airline easyJet has raised about £419 million ($520 million) through a share placing to help bolster its finances after the COVID-19 pandemic devastated the travel industry.
The new equity will help boost its liquidity to about £3 billion, easyJet said, enabling it to survive for many more months even if planes are grounded again, and putting it in a strong position to cope with “protracted recovery scenarios.” EasyJet’s planes returned to the air in mid-June, but with a minimal service. On Thursday, it said it would resume flights to Paris, Barcelona and Milan from Britain from July 1, as it restarts services from Manchester and London’s Luton airport.
The airline is hoping to ramp up flying as the year goes on, but demand is being hampered by UK quarantine rules and consumer nervousness.
Airlines are hoping Britain agrees travel deals with other countries to allow restrictionfree movement between some European countries. A review of quarantine rules is due on June 29. EasyJet said it had placed a total of 59.5 million new ordinary shares at 703 pence apiece, after announcing the move late on Wednesday.
Its shares were down 5.4 percenr to 699.9 pence in early trade on Thursday. They have approximately halved in value since the start of the year.
EasyJet has said it does not expect passenger demand to recover to pre-pandemic levels until 2023 and is planning to axe up to 4,500 jobs.
Bernstein analyst Daniel Roeska said the airline was already making progress with cost cutting. “EasyJet has a compelling proposition of lower cost structures and strong positions in better markets,” he said in a note.
British Airways, owned by IAG, has said it needs to shed 12,000 jobs and there has been media speculation that IAG could also raise new equity. Qatar Airways, IAG’s biggest shareholder, has said it would inject equity into IAG if needed.
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EasyJet plans to cut 4,500 jobs