(Alliance News) - Low-cost airline easyJet PLC said Wednesday its interim loss widened due to charges related to hedge ineffectiveness and discontinued hedge accounting for jet fuel, despite an increase in revenue.
easyJet also announced its intent to raise between GBP400 million to GBP450 million through a share placing, which will go towards further enhancing the group's liquidity position and making its balance sheet stronger.
The airline said the total number of placing share will not go over 54.5 million shares, while the price per share will be determined at the end of the bookbuild. BNP Paribas and Credit Suisse Securities (Europe) Ltd are acting as joint global coordinators, bookrunners and corporate brokers for the placing.
Shares in easyJet closed 6.0% lower at 740.00 pence on Wednesday in London.
Alongside the proceeds from easyJet's sale and leaseback programme in the range of GBP250 million to GBP300 million, following the placing the group expects to have a cash balance in excess of GBP3 billion, allowing easyJet to handle further grounding or protracted recovery scenarios.
For the six months to the end of March, easyJet reported a widened pretax loss of GBP353 million, compared to GBP272 million the year before, due to a GBP164 million net charge, related to hedge ineffectiveness and the discontinuation of hedge accounting for jet fuel and foreign exchange derivative contracts.
Fuel cost per seat dropped by 3.9% to GBP12.51 from GBP13.02 the prior year, driven by a rise in prices, while total fuel costs fell to GBP534 million from GBP602 million. However, the airline's headline cost per seat rose by 5.5% to GBP59.75 to GBP56.66.
Total revenue grew by 1.6% to GBP2.38 billion from GBP2.34 billion the year before, driven by a rise in ancillary revenue, an optimised network, especially in Germany and the bankruptcy of Thomas Cook providing increased demand.
Total revenue per seat was up 9.6% at GBP55.60, as load factor increased by 0.2 percentage points to 90.3%. However, capacity declined by 7.6% to 42.7 million, as did the number of passengers by 7.4% to 38.6 million.
Looking ahead, capacity is expected to build up through the summer season to 30% of planned, pre-Covid-19 levels for the fourth quarter of easyJet's financial 2020.
Although booking numbers for easyJet Holidays are encouraging, due to the continued level of uncertainty, it is not possible to provide financial guidance for the rest of the year, the company said.
"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 GBP1.7 billion of an expected GBP2.0 billion in additional funding," said Chief Executive Officer Johan Lundgren.
"After grounding our fleet in March, we successfully resumed operations on June 15, 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," Lundgren added.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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