Coronavirus: Easyjet secures £600m in Bank of England funding
Easyjet has secured £600m in commercial paper from the Bank of England’s (BoE) new Covid Corporate Funding Facility as the low-cost carrier seeks to strengthen its liquidity during the ongoing coronavirus crisis.
Shares in the firm rose 13 per cent after the announcement.
Airlines have been among the businesses hardest hit by the pandemic, which has seen governments across the world implement stringent bans of travel and border closures.
As a result, passenger revenues have collapsed for most airlines, which have been forced to ground the vast majority of their planes in response.
Easyjet has grounded its entire 350 fleet of planes, saying “there can be no certainty of the date for restarting commercial flights”.
Chief executive Johan Lundgren said: “Our current priority is to safeguard short term liquidity, so we have borrowed from the CCFF and drawn down on our revolving credit facility in order to increase our liquidity in the event of a prolonged grounding of the fleet.
The budget carrier is the first of the UK’s major airlines to make use of the BoE’s scheme to enable business borrowing.
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The airline has been among sector members to call for state assistance for the beleaguered industry.
However, chancellor Rishi Sunak has said that financial help will only be given to airlines as a “last resort” once they have exhausted all other means of raising cash.
In addition, Easyjet has today also issued a request to fully draw down on its $500m revolving credit facility, secured against aircraft assets.
As a result, the airline has cash reserves of around £2.3bn.
The announcement of the new funding came just hours after founder Sir Stelios Haji-Ioannou warned that the company risked running out of cash by August if it did not cancel a £4.5bn order from Airbus.
Sir Stelios has threatened to remove Easyjet’s finance chief if the board does not comply with his wishes.