LONDON – Yesterday, easyJet (U2) announced a £450m rights issue to shore up its cash reserves against the Covid-19 crisis.
According to internal sources, to help itself in this period and emerge as a strong competitor, U2 has already secured an additional £1.7bn from an expected £2bn in additional funding as it considers further liquidity and funding options.
As a result, U2 has decided to launch equity placing that the carrier is offering to institutional investors to reduce its debt level, improve its levels of liquidity, and increase the strength of its balance sheet.
Share capital position
in addition, U2 expects to issue equity up to approximately 14.99% of its share capital worth approximately £400-450m.
This will be done in two stages, with a firm placing for up to 9.99% of its share capital and up to 5% which requires shareholder approval through an ordinary resolution at a General Meeting that will be held on July 14.
Economic situation compared to 2019
easyJet also reported bigger Q1 losses for the six months to March 31. U2 had a strong performance in Q1 before it was hit by the Coronavirus pandemic, which meant it had a 30% improvement in headline loss of £193m compared with a Q1 loss of £275m last year, reflecting its normal seasonality.
In total, Group revenue increased by 1.6% to £2,382m (Q1 2019: £2,343m) due to self-help measures such as U2’s late yields initiative and network optimization.
Statement from easyJet CEO
“We have cut costs, vastly reduced our capital expanditure while at the same time keeping the industry leading flexibility we have around our fleet. We have also begun to set out proposals to reshape the business over coming months”. said by U2 CEO Johan Lundgren (53).
Lundgren added, “I am extremely proud of all the U2 team as done to bring as through exceptionally challenging period, although I am aware that we still have very difficult times ahead of us”.
“As Europe emerges from the Covid-19 crisis, I belive we are well placed to strengthen our leadership position with our trusted brand, offering value for money from an industry-leading network of primary airports”.