easyJet (London Luton) founder Stelios Haji-Ioannou has ruled out investing more money in the budget airline amid speculation that the FTSE 250-listed company plans to tap investors for more cash.
A spokesman for easyJet responded as follows: “We will continue to review our liquidity position and to assess further funding opportunities should the need arise.”
Speaking to The Mail on Sunday, Haji-Ioannou, who last month made millions by selling shares and reducing his family's holding in the airline to 27.7%, said it was "inevitable that more equity will have to be raised from investors". "They lost GBP1.5 billion pounds (USD1.3 billion) in the year to September 2020, and my guess is that they will lose a similar sum this year." For as long as the company spent money on buying Airbus aircraft, he would not sink more funds into the airline, he said. "I am not going to invest any of my money with them.”
The airline is completing a GBP4.5billion (USD6.2 billion) order of 107 Airbus aircraft but has agreed with the manufacturer on a deferral of orders from Financial Years 2022, 2023, and 2024. The two parties will move a total of 22 aircraft from FY2022-FY2024 to FY2027-FY2028. Also, there will be a movement of 15 delivery dates within the period FY2022-FY2024 to more closely match forecast seasonal requirements.
All aircraft purchased under the terms of the original 2013 agreement with Airbus are subject to a discount from the list price, which remains unchanged. The changes also result in a re-phasing of the order book's pre-delivery payment cash flows due to the later dates of delivery.
Meanwhile, The Mail on Sunday reports analysts at Citigroup said the airline could need another GBP300million (USD419 million) of equity to keep its debt to earnings level at a sustainable level. This gave rise to speculation that easyJet would ask investors for new funds for the second time within 12 months to secure its financial position.
However, as previously reported, easyJet on January 11 announced “the continued strengthening of its liquidity position” with the signing of a new five-year loan facility worth up to GBP1.4 billion (USD1.87 billion), underwritten by a syndicate of banks. Chief Executive Officer Johan Lundgren said the company had now secured more than GBP4.5 billion (USD6.2 billion) in liquidity since the start of the pandemic.
This included GBD600million (USD837 million) from the UK government through an unsecured loan that easyJet must pay back in March 2021. It raised another EUR1.2 billion (USD1.4 billion) by issuing a bond to be repaid in 2028. It also raised GBP420 million (USD586 million) last summer by placing new shares with investors after its fleet was grounded.
In a trading statement for the first quarter ending December 31, 2020, released on January 28, easyJet said it had completed aircraft sale and leaseback transactions generating total gross cash proceeds of USD1.026 billion during the first quarter. "The transactions across 32 aircraft have increased the lease liability by a total of GBP492 million (USD687 million). easyJet entered these transactions with several counter-parties, including SMBC Aviation Capital. Following these transactions, we retain ownership of 55% of the total fleet, with 38% unencumbered. We are not currently considering any further large-scale sale and leaseback transactions," the company said.
