MIAMI – The UK leisure airline Jet2 (LS) has raised £422M ($582M) in new equity to help it face the COVID-19 pandemic. The global travel restrictions have been extremely challenging for the airlines as well as for the travel companies.
On Tuesday, the British Government implemented a new portfolio of strict rules, regarding all forms of travel, to face the rapid expansion of the virus.
Holidays are banned due to lockdown all around the country but at the moment all travelers into the UK must complete three (3) Covid-19 tests. One before departure and two in the days after arrival. As a result, the airline was forced to cancel all of its flights until April 15, in response to the former restrictions and as for now, air travel is mostly shut down.
Under this environment, the Leeds airport (LBA)-based carrier fulfilled a large fundraising campaign to secure any future liquidity issues as its stock faced a dramatic decline of 35% last year. This share placing represents about 22% of the airline’s stocks.
According to several analysts, LS can now endure a no-flying scenario for over 12 months when at the same time the British holiday company is now able to continue to make longer-term strategic decisions to support long-term profitable growth.
Comments from Jet2
The airline’s Executive Chair Philip Meeson stated that “Based on the indicative scenario planning undertaken by management, the board believes that the proceeds will provide sufficient liquidity on an extended and likely unpredictable shutdown basis to deal with this continually challenging trading environment.”
Meeson further stated that “the directors believe the fundraise will enable management to continue to adopt a decisive, but prudent, responsible financial management approach; take longer-term strategic decisions to support sustainable long term profit growth, and improve the ability for LS to exit the pandemic in a stable commercial position.”
Concurrently, the carrier announced that would file an application about its eligibility for government-backed COVID-19 Corporate Financing Facility loans.
Jet2’s Competitor in Europe
On the other hand, LS’s main competitor TUI (BY) seems to be optimistic about the outlook. BY is the world’s largest holiday group and recently has been bailed out by the German government. The German holiday company plans to operate 80% of its 2019 capacity and it is confident that it will be able to face the traffic of this year’s peak season.
The world’s biggest travel operator said it had received 2.8m bookings for summer breaks, just more than half of 2019 levels, as customers splashed out on more expensive holidays. Moreover, BY added that current financial resources would be “enough until summer.”
Featured image: Jet2 G-GDFE Boeing 737-3Q8(QC). Photo: Fabrizio Spicuglia/Airways