Budget carrier launches £419m share placing and unveils half year figures
Budget airline easyJet has announced a share placing, which has raised £419m, to improve its liquidity.
The carrier, which operates 46 routes out of Manchester Airport and 34 from Liverpool John Lennon Airport, also announced its results for the six month period to March 31, which would have included the start of the coronavirus pandemic lockdown. It announced it was grounding its entire fleet on March 30.
Revenues rose from £2.343bn in 2019 to £2.382bn this year.
Pre-tax losses deepened from £272m in 2019, to a pre-tax loss of £353m for 2020. The airline normally reports a half year loss, ahead of its traditionally strong Summer period.
Passenger numbers for the six months to March 31, decreased by three million (7.4%) to 38.6 million due to the impact of COVID-19.
Looking ahead, the airline said capacity is expected to build through the Summer season, with quarter four at 30% of planned, pre-COVID-19 capacity
It said booking numbers for easyJet Holidays are encouraging.
Chief executive Johan Lundgren said: “EasyJet delivered a strong performance in the first half prior to the onset of the COVID-19 pandemic, resulting in a 30% improvement in headline loss before tax versus the same period last year.
“We have been decisive in meeting the challenges of the pandemic by cutting costs, vastly reducing our capex while retaining our industry-leading fleet flexibility and having already secured £1.7bn of an expected £2bn in additional funding.
“After grounding our fleet in March, we successfully resumed operations on 15 June, incorporating new enhanced bio security measures to ensure our staff and customers can fly safely.
“We will gradually ramp up our flying to around 75% of our routes in August, albeit with lower frequencies, so our customers can go on Summer holidays.
“We are also continuing to work to strengthen our balance sheet.
“Today we have announced plans for an equity placing which will further enhance easyJet’s liquidity position, credit metrics and already strong balance sheet through the COVID-19 recovery.”
He added: “I am extremely proud of all the easyJet team has done to bring us through this exceptionally challenging period.
“As Europe emerges from the COVID-19 crisis, easyJet is well placed to strengthen its leading position as a trusted brand offering value for money with an industry-leading network of primary airports.”
Russ Mould, investment director at Manchester investment platform AJ Bell, said: “Raising £419m at only a five per cent discount to last night’s closing price is quite an achievement for easyJet.
“One might have expected a much greater discount given the large risks to the airline sector this year.
“Prior to the placing, the company had £2.4bn in cash from a variety of sources, including government and bank loans.
“Topping up this pot with extra cash certainly puts easyJet in a stronger position as it recommences some flights.
“Yet, should there be another wave of coronavirus and new travel restrictions imposed, easyJet could see that funding position deteriorate rapidly because its estimated cash burn rate is £1bn for every three months of full grounding.
“Pictures across the news of a packed Bournemouth beach yesterday would suggest there is an appetite among the public to enjoy themselves with a bit of sand and sea, even in a crowded environment.
“The test for easyJet is whether this pent-up demand for sun loungers and ice cream will extend to travelling by plane to overseas destinations.
“Anecdotally, there seems to be more of an appetite among people to drive to Europe via the Channel Tunnel, enjoying the safety of their own car, rather than sitting among strangers in a metal tube in the sky.
“Others will have simply written off the idea of going away on a Summer holiday this year and have shifted their booking to next Summer.
“With coronavirus still omnipresent around the world, it is going to be a very hard slog for easyJet to start repairing its earnings as customer demand and the length of time that travel restrictions between various countries will stay in place remain so uncertain.”