easyJet (London Luton) announced on January 11 “the continued strengthening of its liquidity position” with the signing of a new five-year loan facility worth up to USD1.87 billion, underwritten by a syndicate of banks.
The facility for the cash-strapped carrier is supported by a partial guarantee from the United Kingdom’s export credit agency UK Export Finance under its Export Development Guarantee (EDG) scheme.
The EDG is available to qualifying UK companies, does not carry preferential rates or require state aid approval, and contains some restrictions such as around dividend payments, easyJet said in a statement dated January 8 but published on January 11.
As with other European airlines, easyJet had been pinning its hopes on a recovery in air travel demand this spring, but with most countries back in lockdown, capacity is expected to remain minimal for several more months.
“This facility will significantly extend and improve easyJet’s debt maturity profile and increase the level of liquidity available,” CEO Johan Lundgren said, adding that the company had now secured more than GBP4.5 billion pounds (USD6.07 billion) in liquidity since the start of the pandemic.
“The loan facility, provided on commercial terms, reflects constructive and collaborative work between easyJet, multiple banks, and UK Export Finance.”
The airline, which has laid off 4,500 employees and sold dozens of its aircraft, also said it aims to repay and cancel part of its shorter-term debt during the first quarter of 2021, namely a fully drawn revolving credit facility of USD500 million and term loans of around GBP400 million (USD540 million).
“This will free up a number of aircraft assets to further strengthen easyJet’s balance sheet,” it said.
Other companies hit by travel restrictions have also made use of UK Export Finance guarantees, including Rolls-Royce and IAG International Airlines Group-owned British Airways (BA, London Heathrow).
easyJet concluded its statement by saying it would continue to review its liquidity position on a regular basis and continue to assess further funding opportunities should the need arise.
