- EasyJet boosts liquidity with a new five-year £1.39 billion loan facility.
- The loan imposes restrictions on EasyJet’s future dividend payments.
- The low-cost air carrier has so far slashed its workforce by 4,500 jobs.
EasyJet plc (LON: EZJ) signed a new five-year loan facility late on Friday valued at £1.39 billion, backed partially by the British government in a bid to shore up finances amidst the ongoing Coronavirus pandemic that continues to wreak havoc on the airline industry.
EasyJet shares opened close to 2% up on Monday but lost the entire intraday gain in the next hour. The stock is currently trading at £7.80 per share versus £4.70 per share in October. The British air carrier had touched a high of £9.3 per share in the first week of December.
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The loan imposes restrictions on future dividend payments
The terms of the new loan impose a few restrictions on the British multinational’s future dividend payments. A group of banks also underwrote the new loan facility that EasyJet secured on Monday. In an announcement in December, the London-based air carrier said its board member stepped down over her Wirecard role.
The COVID-19 crisis has so far infected more than 300 thousand people in the United Kingdom and caused over 81 thousand deaths. Owing to the rising cases of the novel flu-like virus, Prime Minister Boris Johnson ordered another national lockdown in the first week of January.
According to EasyJet, the newly imposed restrictions are likely to keep air travel restricted to a bare minimum for the next few months. Originally, the company had expected fast recovery in passenger numbers during the upcoming spring.
The budget air carrier said that its debt maturity profile improved due to the new loan facility. The full drawn £370.67 million credit facility, EasyJet stated, will be repaid and cancelled in the first quarter along with roughly £296.53 million of term loans.
EasyJet has so far slashed its workforce by 4,500 jobs
To cushion the economic blow from the COVID-19 crisis, the low-cost airline has so far slashed its workforce by 4,500 jobs, sold aircraft, and approached shareholders to boost liquidity. EasyJet said:
“EasyJet will continue to review its liquidity position on a regular basis and will continue to assess further funding opportunities, should the need arise.”
In a report published in November, EasyJet said it swung to £1.27 billion of pre-tax loss in fiscal 2020, due to the ongoing COVID-19 crisis.
EasyJet performed largely downbeat in the stock market last year with an annual decline of roughly 40%. At the time of writing, the budget airline is valued at £3.60 billion.