Following its founder expressing his frustration about finances, easyJet has managed to secure a £600 million ($740 million) loan. The money will be handed over from the Treasury and Bank of England’s emergency coronavirus fund. This is to support the United Kingdom-based carrier while its fleet is grounded till at least until June.
The loan confirmation comes at a time when easyJet’s biggest shareholder, Sir Stelios Haji-Ioannou, shared that his airline could run out of cash by August. The Guardian reports that, in addition to these funds, the operator is seeking a further $500 million from commercial creditors to ensure liquidity goals are met.
Unlike the United States’ blanket bailout initiative, the UK’s government is reviewing financial support on a case by case basis. Therefore, easyJet must have managed to tick some boxes in order to receive such a substantial loan.
Focused on the future
Company CEO Johan Lundgren spoke of how his firm is committed to seeing out this tough period. There was already trouble when demand dropped but international travel restrictions absolutely rocked the market. Ultimately, the airline is seeking to be fit and fighting once the skies are open again.
Lundgren said the following, as reported by The Guardian.
“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.”
The executive went on to state that the safeguarding of easyJet’s short-term liquidity is its current priority in case there is a prolonged grounding of its fleet. Moreover, Lundgren shared that the business has reached agreements with unions to furlough 4,000 UK-based pilots and crew.
Just last month, Sir Stellios was paid $74 million out of a total of $210 million in dividends. However, since he is looking to terminate the £4.5 billion Airbus contract, he will not inject any fresh equity into easyJet while liability with the manufacturer is still in place.
The serial entrepreneur even said that if the contract is canceled, easyJet would not even need loans from taxpayers. Additionally, he said that the company would have a better chance to survive and thrive in the future with his preferred course of action.
Altogether, easyJet’s executives will be glad to have already secured nearly half of their funding goal. This month is set to be a crucial time for the aviation industry with several nations reviewing their travel policies and governments analyzing airline support requests.
Simply Flying reached out to easyJet regarding its £600 million loan, but did not hear back before publication. We will update the article with any further announcements.
What are your thoughts on easyJet’s success in securing the loan? Let us know what you think of the situation in the comment section.