EasyJet secures £1.4bn state-backed bailout to help struggling budget airline survive coronavirus pandemic
EasyJet last night secured a £1.4billion state-backed bailout to help the struggling budget airline survive the pandemic.
The firm said the five-year loan had been underwritten by a group of banks and part-guaranteed by UK Export Finance, a government agency.
It will help Easyjet navigate turbulence in the coming months as tough coronavirus restrictions across Europe – including the third UK lockdown – continue to batter the travel industry.
Struggle: The firm said the five-year loan had been underwritten by a group of banks and part-guaranteed by UK Export Finance, a government agency
However, Easyjet will not be able to pay dividends for the term of the loan under conditions it has agreed. The company said the loan, which has been secured against aircraft, eased pressure on its balance sheet and freed up cash available.
It means that during the first three months of this year, it will reduce its £369m overdraft and another loan of £400m.
The bailout has been agreed just days after British Airways owner IAG struck a similar deal with banks, which was also part-guaranteed by the UK Government.
Last night Johan Lundgren, Easyjet’s boss, said: ‘Easyjet has taken swift and decisive action, having now secured more than £4.5billion in liquidity since the beginning of the pandemic. The loan facility, provided on commercial terms, reflects constructive and collaborative work between Easyjet, multiple banks and UK Export Finance.’
He added that the firm was ‘well positioned’ for later this year when it is hoped restrictions will lift and the travel industry can open up again.
Airlines face a bleak start to 2021 due to the latest lockdown, with most being forced to trim their already threadbare schedule.
Ryanair this week said it would now run ‘few, if any’ flights from the UK and may only carry 500,000 passengers in February and March – far below the 10m it would normally expect on a monthly basis.
The Government has said that arrivals to the UK will need to present evidence of a negative Covid-19 test taken within 72 hours before landing and will also need to self-isolate for ten days.
Analysts have warned that the bleak situation makes efforts to stage a recovery in travel this summer all the more crucial to the survival of some carriers.