MIAMI – According to industry experts, easyJet (U2) would have to increase its balance sheet via its shareholders in 2021 to repair the airline’s finances.

With the deal, U2 could offer investors convertible bonds and loans that could be converted into shares, said Andrew Lobbenberg, an analyst at HSBC. He added that once the cash flow generation is up, the carrier could make its move.

From Lobbenberg’s point of view, U2 has been struggling “slightly” throughout the year in comparison with other low-cost carriers. Currently, the airline is operating capacity at 20% for the Winter season while Wizz Air (W6) and Ryanair (FR) are expanding their networks.

During Summer 2020, the airline totaled £2.7bn in cash by selling and leasing back aircraft worth £400m. However, until September, it had already burned about £651m. In its latest financial results, U2 reported a pre-tax loss of £1.3bn. Now, the recent UK government measure on lifting travel restrictions could also help the airline’s balance sheet.

easyJet Airbus A320-200 lands at Bristol Airport, UK. Photo: Adrian Pingstone.

Detailed Debt

The above declarations follow the last report from UK newspaper The Telegraph regarding U2’s financial status. The airline has made efforts to refinance a debt of more than £1.4bn to taxpayers and lenders. Thus, U2 has engaged AlixPartners, a crisis experts firm. The Telegraph unveiled that the outfit has been advising the airline since May.

Opposite to gaining money from aircraft operations, the alliance would now focus on repaying its debts. On the one hand, U2 has to deliver £600m of debt under the government’s Covid Corporate Financing Facility loan. On the other hand, it must pay at least £800m to banks in February 2022.

The Telegraph’s report also mentioned that U2 would be seeking to combine new funding from the UK taxpayer and fresh bank loans. Supporting this plan, a further injection of cash from next summer could come in to help U2’s rescue, this according to aviation consultant Richard Maslen.

Featured photo: easyJet Airbus A320. Photo: Daniel Sander.