Airline easyJet raises cash after losses widen due to COVID-19

LONDON (Reuters) – Budget airline easyJet (EZJ.L) on Wednesday sought to raise up to 450 million pounds via a share placement to help it navigate the COVID-19 pandemic after reporting a bigger first-half loss.

The airline, which grounded its fleet on March 30, has said it does not expect passenger demand to recover to pre-pandemic levels until 2023.

The company said it would raise 400-450 million pounds by placing up to 59.5 million shares, equivalent to 15% of its share capital. A bookrunner said the placement was oversubscribed, adding the shares would be priced at 703 pence each, a 5% discount to Wednesday’s close.

“We have been decisive in meeting the challenges of the pandemic,” Chief Executive Officer Johan Lundgren said, noting the airline had already secured 1.7 billion pounds of an expected 2 billion in additional funding.

EasyJet said more customers than expected had rebooked or taken a voucher instead of a refund. That, combined with the share placement, a government-backed loan and other measures, should give it an higher-than-expected cash balance of more than three billion pounds, it said.

The airline, which has joined a legal challenge to the UK’s newly-introduced quarantine rules, plans to ramp-up flights in the next two months after restarting a minimal service last week

It aims to operate 30% of planned pre-COVID-19 capacity in Q4 and pointed to “encouraging” bookings for easyJet Holidays, but did not provide financial guidance.

EasyJet said “underlying” trading was ahead of expectations, although its pretax loss widened to 353 million pounds for the six months ended March 31 from 272 million pounds a year ago as flying restrictions rendered fuel hedges ineffective.

The company also said it would begin a “progressive” employee consultation process this month, having already announced it will cut 4,500 jobs.

Reporting and photo: Reuters

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