Budget carrier says deals will give it £2.3bn of cash reserves
Budget carrier easyJet says it will have access to cash reserves of around £2.3bn after it revealed it has used the Covid Corporate Financing Facility (CCFF) and its revolving credit facility.
The boost comes hours after founder Sir Stelios Haji-Ioannou warned the airline, which operates key routes from both Liverpool John Lennon and Manchester Airports, could run out of money by August.
However, early this afternoon easyJet said it has been successful in its issuance of £600m of commercial paper through the CCFF, which enables the Bank of England to buy short-term debt from larger companies.
The carrier said it has also issued today a utilisation request to fully draw down on its $500m Revolving Credit Facility, secured against aircraft assets.
As a result of this, by April 9, easyJet is expected to have access to cash reserves of approximately £2.3bn.
Given the possibility of a prolonged grounding because of global travel restrictions caused by COVID-19, easyJet said it will continue to consider further liquidity and funding options.
The company and airline pilots’ union BALPA have also reached an agreement on furlough arrangements for the company’s pilots.
The agreement will be effective from April 1, 2020.
Last week easyJet announced it had reached an agreement on furlough arrangements for its cabin crew and training instructors. That agreement was also effective from April 1.
Following the Financial Conduct Authority’s recent update on reporting guidelines, easyJet will release a trading update in the second half of April and a half year results announcement on June 30.
Chief executive Johan Lundgren said: “We remain absolutely focused on ensuring the long-term future of the airline, reducing our costs and preserving jobs, to make sure easyJet is in the best position to resume flying once the pandemic is over.
“We are pleased that we have now reached agreement with both Unite and BALPA regarding furlough arrangements for UK-based easyJet pilots and crew.”
He added: “Our current priority is to safeguard short term liquidity, so we have borrowed from the CCFF and drawn down on our Revolving Credit Facility in order to increase our liquidity in the event of a prolonged grounding of the fleet.
“The CCFF provides businesses with access to funds at the commercial rates which were available before the coronavirus crisis, and any UK company that had an investment grade rating before the crisis can apply for this funding.”
Sir Stelios had urged easyJet directors to scrap a multibillion pound deal with Airbus to avoid taking tax-payer funded loans.
The carrier’s biggest shareholder wanted the group to cancel the £4.5bn order for 107 planes, which he said could stand idle due to the ongoing coronavirus pandemic.
Shares in easyJet rose 13.28%, 63.06p, to 538.06p following news of its financial deal.