The chairman of easyJet, John Barton, has announced today that shareholders are expected to approve the airline’s £419 million ($524m) share sale. The finance will provide a buffer for the carrier as it slowly recovers from the effects of the coronavirus pandemic.
Majority of easyJet’s shareholders in favor of share sale
As reported by Bloomberg on Tuesday, easyJet chairman John Barton said he expected the approval of shareholders for the low-cost carrier’s £419m share sale. He told investors that the airline had received proxy votes worth 60% of share capital in favor of the sale. It only required a simple majority to push forward with the proposal.
Luton-based easyJet disclosed last month that it was aiming to raise finance by issuing almost 15% of its current share capital for 703 pence per share. The price represented a 5% discount over the closing price of 740 pence per share on June 24. The final result of the sale will be announced soon.
Following the increase in equity, the company has said it will have more than £3 billion in cash. That figure includes finance raised from sale and leaseback deals for some of its fleet. The airline’s financial position has been helped by losses being less than anticipated as more passengers than expected have opted for vouchers for canceled flights rather than requesting cash refunds.
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easyJet is increasing routes
As the COVID-19 travel restrictions began to be eased, easyJet was one of the first European carriers to start increasing its routes. The airline plans to have 50% of its regular routes operational in July, rising to 75% in August. However, while it will salvage some of the summer season, capacity will be reduced by around 30% due to lower flight frequencies.
Ongoing controversy for easyJet
The UK’s largest discount airline is not without controversy. On June 30, it announced plans to close three of its bases at Newcastle, London Southend, and London Stansted. The proposal could also involve the layoff of around 5,000 of its workforce.
Earlier in June, easyJet managed to reach an agreement with Airbus to push back the delivery of 24 A320neo aircraft by five years. The company’s founder, Sir Stelios Haji-Ioannou has previously tried to terminate the £4.5bn contract with Airbus, saying that he feared the airline would run out of cash by August.
In a long-running saga, Sir Stelios has called for the removal of four of the company directors, including Chairman John Barton. As tensions with the board continued, Sir Stelios sold more than £13m ($16.3m) of his shares in the airline, leaving him with a stake of under 33%.
Along with British Airways and Ryanair, easyJet was prepared to challenge the UK government over its quarantine policy. It was claimed that the policy was irrational and seriously damaging to the economy and the travel industry. The airlines claimed victory after the government scrapped the quarantine for passengers arriving from 59 key destinations.
Hopefully, easyJet’s share sale and the easing of quarantine restrictions will smooth the way to recovery for the airline.