EasyJet raises cash to guard against renewed grounding, slow recovery

(Sharecast News) - EasyJet has annunced that it will raise more cash in order to increase its liquidity and to guard against the risk of being forced to ground its fleet of aircraft again or that the recovery in demand might take longer than foreseen.
After the close of markets on Wednesday, the company said it would issue as many 59.542m shares, or 14.99% of the company's capital, through an accelerated bookbuilding for expected proceeds of £400-450m.

Wednesday's capital raise was to start immediately following the announcement but the issue of five percentage points worth of the new shares would depend on shareholder approval.

Together with a raft of other measures taken since the start of the pandemic, including a final sale and lease back transaction still pending for £200-350m, easyJet expected to have over £3.0bn of cash on hand, versus roughly £2.2bn as at 22 June.

The carrier also updated its estimates for cash burn, projecting that a three-month long full grounding of its fleet would see £1.0bn of liquidity gone, £2.1bn over six months and £3.0bn over nine months.

In the end, its fleet had been fully grounded for 11 weeks, from 1 April to 15 June and cash burn had been a bit less than feared, with capacity set to be added over the summer as demand grew and government restrictions were lifted.

Operating cost cash burn meanwhile had been cut by about 70% and extended payment terms agreed with many of its major suppliers.

So too, planned capital expenditures for the next two years had been axed by postponing 24 jet deliveries past the 2025 financial year together with an option to defer a further five.

Further funding headroom would be provided by the remainder of the fleet, with half of it remaining "unencumbered" after the sale and leaseback.

Plans were also being made to scale its fleet and cost structure to meet the gradual recovery in demand that was being projected.