LONDON – In continued efforts to raise more liquidity, easyJet (U2) has sold another nine aircraft, at a list price of £305.7m. This comes following the carrier’s negative financial performance during the COVID-19 pandemic.
It is understood that there are two buyers in this deal, consisting of Wilmington Trust Services and Sky High 112. Wilmington will purchase five Airbus A320s, with Sky High 112 purchasing the remaining four.
This means that since August, the airline has sold around 32 aircraft, valued at £913.7m, after selling 23 aircraft back in August for around £608m.
Fresh Finances Needed
The downturn caused by the pandemic has halved the airline’s passenger numbers to just 48 million for the year, meaning that the airline is on track to make its first-ever full-year loss.
Due to the continued restrictions in Europe, the airline will be flying only 25% of its pre-COVID scheduling, meaning that opportunities for revenue growth are very slim currently.
Such restrictions include the continuation of the 14-day quarantine policy, with passengers in the UK in particular only being able to go to certain countries on the green list.
On top of the aircraft being sold, the airline has sold 15% of its existing share capital for £419m, with this deal and the aircraft being sold causing shares to dip by 1.2%.
Key Markets Being Effected
easyJet’s main markets stem from destinations in France, Spain, and Portugal, who are all imposing strict quarantine measures. This is of course caused by the Europe-wide surge in infections, stemming the potential question of a second wave of the virus.
Without the borders of the main markets open, it does mean that U2 begin to lose a lot of money, resulting in the carrier selling aircraft and share capital.
The situation has got so bad for the airline that earlier this month, it was reported that the airline has been speaking with a government minister in the United Kingdom for more financial support. This would be asking for more than the £600m the airline received from the UK Treasury in the form of a Coronavirus loan back in April this year.
easyJet’s experience with the pandemic started at the end of March this year when it announced it would be grounding the entirety of its fleet due to the high drop in demand.
From there, the airline was beginning to look at ways of cutting its high overheads, which caused shareholder in-fighting with the founder Sir Stelios Haji-Ioannou over the executive board not canceling its remaining Airbus orders. By May, the airline then said it would resume its operations in June, but on a very gradual basis due to demand levels still continuing to be volatile.
With base closures being announced, such as the three in the UK and other areas of Europe, staff ended up protesting, which again did not really work as U2 pushed ahead with the cuts regardless.
This was when the equity campaigns began at the airline, with the first one being in June this year, where the airline wanted to raise around £450m. Other motions included the sale and leaseback of its Airbus A320neo aircraft, especially ones it had just received from Airbus just before the pandemic began.
It was then announced in September according to sources in the airline that easyJet was allegedly “hanging by a thread” due to the downturn getting much worse. This resulted in the closure of two bases in Italy which would occur on more of a temporary basis.
The future as we already know looks very uncertain, as we just don’t know when this pandemic will decrease in its notoriety and prevalence.
This of course will place significant doubt into the viability of easyJet, because there are only so many aircraft and shares that can be sold in an airline before new ownership has to take place.
What has been remarkable is how quiet Sir Stelios has been in recent months, especially after the Airbus order debacle. What could he be planning or is he just focusing on the financials as much as he can before another revolution occurs? In time, all we can do is wait and see.
Featured Image: easyJet Airbus A319. Photo Credit: Francesco Cecchetti
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