The biggest shareholder of easyJet (U2, London Luton), the family of founder Stelios Haji-Ioannou, has decided not to participate in the British airline's GBP1.2 billion pound (USD1.6 billion) rights issue and has sold its rights to buy new shares, a source familiar with the situation has told Reuters.

After rejecting a takeover bid from Hungary's Wizz Air Holdings recently, the UK-headquartered budget airline asked shareholders if they would support it with a cash injection via a rights issue to get its balance sheet back on track and to invest in a new generation of aircraft to improve efficiencies.

However, the Haji-Ioannou family - who originally made their fortune in the shipping industry - sold their rights to buy new shares. The family sold 76.3 million nil paid rights at GBP1.65 (USD2.26) pounds, a 15% discount to the closing price of the rights on September 23, 2021, the source said.

As reported previously, the family has repeatedly stated it does not plan to plough more money into easyJet while the airline sticks to a deal with Airbus to buy more aircraft. Haji-Ioannou, who quit the airline’s board in 2010, sought to oust board members last year in a row over a GBP4.5 billion (USD6.2 billion) order of Airbus aircraft. He owns just over 25.3% of the company.

As a result of the rights issue, the family's stake is set to reduce to 15.2% when the new shares go live on September 28, 2021, which essentially means the end of Haji-Ioannou's grip on the company.

When a company launches a rights issue, it will offer existing shareholders the right to buy new shares, invariably at a discount to the prevailing price. The size of the discount depends on the amount of new money being raised, the way the company is perceived by investors, and general market conditions, according to This is Money.

easyJet has already raised more than GBP5.5 billion (USD7.5 billion) since the start of the COVID-19 crisis including GBP420 million (USD757 million) from shareholders.

It has also cut costs by selling aircraft, furloughing staff, and retrenching 4,500 employees, equivalent to 30% of its workforce.

easyJet reported its first-ever annual loss of GBP1.3 billion (USD1.7 billion) last year and posted another GBP1 billion (USD1.3 billion) loss in the first nine months of this financial year.

The company was not immediately available for comment.