LONDON – As part of its efforts to raise money, easyJet (U2) has announced the sale and leaseback of six Airbus A320neo.
This deal was valued at US$255m and was placed with leasing firm SMBC Aviation Capital.
The transaction was split up into two portions. One was for the initial US$126m for three aircraft included in the reported £301m proceeds outlined in the carrier’s first half results with the other three valued at US$129m reflecting the remaining proceeds.
The aircraft will be leased back for terms of 110-122 months with such obligations valued at £155m accordingly.
The release from the London Stock Exchange revealed that U2 is still in talks with SMBC Aviation Capital as there have been “other unencumbered aircraft in the… fleet” that has been identified.
More Aircraft on Sale and Leaseback
The carrier has said that SMBC remains the “preferred partner for the transaction” going forward.
So ultimately, there could be more aircraft that would be placed on sale and leaseback as it does provide the necessary funding structures to remain afloat.
Yesterday, U2 announced a £450m rights issue to shore up its cash reserves against the Covid-19 crisis.
Revenue Losses Due to COVID-19
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.
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.
Comments from easyJet CEO
Earlier this month, the carrier had announced that it will be deferring its aircraft deliveries for five years, pushing them back to 2025.
easyJet Chief Executive Johan Lundgren said in a statement that he was pleased to confirm the detail of U2’s revised aircraft delivery commitments.
“The 24 aircraft that were originally deferred beyond December 2022, will now be delivered from FY2025 to FY2027, whilst our significant discount from list price remains unchanged,” said the CEO.
The chief executive also said, “The changes agreed defer capacity in the medium term while continuing our long-term strategy of replacing our older fleet with the advanced and lower fuel-burning A320NEO family.”
Keeping load factors up
Overall, it remains clear that there is still a lot of work for easyJet to do, especially as it aims to reposition itself in the wake of a global pandemic.
As air travel is beginning to restore in Europe, it will be in the low-cost carrier’s best interests to keep load factors up and also to keep boosting revenues and profits where possible.