EasyJet Secures £ 1.4 billion government-backed rescue package to help it survive the coronavirus pandemic
- Five year loan signed by a group of banks and partially funded by UK Export Finance
EasyJet secured a government-backed £ 1.4 billion bailout last night to help the struggling low-cost airline survive the pandemic.
The company said the five-year loan was signed by a group of banks and was partially guaranteed by UK Export Finance, a government agency.
It will help Easyjet manage the turmoil in the coming months as strict Europe-wide coronavirus restrictions – including the third lockdown in the UK – continue to weigh on the travel industry.
Kampf: The company said the five-year loan was signed by a group of banks and was partially guaranteed by UK Export Finance, a government agency
However, Easyjet cannot pay dividends for the term of the loan under the agreed terms. The company said the aircraft-backed loan eased pressure on its balance sheet and freed up available cash.
This means that in the first three months of this year the overdrafts will be reduced by £ 369 million and another loan by £ 400 million.
The rescue operation was agreed only a few days after British Airways owner IAG signed a similar contract with banks, which was also partially guaranteed by the British government.
Last night, Easyjet boss Johan Lundgren said: ‘Easyjet has acted quickly and decisively, securing more than £ 4.5 billion in liquidity since the pandemic began. The credit facility, granted on commercial terms, reflects the constructive and collaborative work between Easyjet, several banks and UK Export Finance. ‘
He added that the company is “well positioned” for later this year if it is hoped the restrictions can lift and the travel industry can reopen.
Airlines face a bleak start to 2021 due to the recent lockdown, with most being forced to cut their already worn-out flight schedules.
Ryanair said this week it would now offer “few, if any” flights from the UK, potentially only carrying 500,000 passengers in February and March – well below the 10 million normally expected monthly.
The government has stated that arrivals in the UK must present evidence of a negative Covid-19 test taken within 72 hours of landing and self-isolate for ten days.
Analysts have warned that the bleak situation makes efforts to recover travel this summer all the more important to the survival of some airlines.