easyJet secures £600 million in government funding
easyJet has issued £600 million of commercial paper through the Covid Corporate Financing Facility.
The decision comes as the low-cost carrier seeks to maximise its liquidity in the wake of the coronavirus pandemic. The airline has currently suspended virtually all flights, and there is a growing concern over the financial impact of an extended grounding.
easyJet has also issued a utilisation request to fully draw down on its $500 million revolving credit facility, secured against its planes. As a result of these two moves, easyJet is expected to have access to cash reserves of £2.3 billion by Thursday.
Johan Lundgren, easyJet chief executive, said: “Our current priority is to safeguard short term liquidity, so we have borrowed from the Covid Corporate Financing Facility 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 Covid Corporate Financing Facility provides businesses with access to funds at the commercial rates which were available before the coronavirus crisis and any UK
company that had an investment grade rating before the crisis can apply for this funding.”
The Covid Corporate Financing Facility is a government scheme designed to provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy.
It seeks to help businesses across a range of sectors to pay wages and suppliers, even while experiencing severe disruption to cashflows.
Given the possibility of a prolonged grounding easyJet will continue to consider further liquidity and funding options, the carrier added in a statement.
Separately, easyJet and BALPA have collaboratively reached an agreement on furlough arrangements for its pilots.
The agreement will be effective from this month.
Last week, easyJet announced it had reached an agreement on furlough arrangements for its cabin crew and training instructors.
Lundgren added: “We remain absolutely focused on ensuring the long-term future of the airline, reducing our costs and preserving jobs, to make sure easyJet is in the best position to resume flying once the pandemic is over.
“We are pleased that we have now reached agreement with both Unite and BALPA regarding furlough arrangements for UK-based easyJet pilots and crew.”
Shares in easyJet were up 14 per cent this morning, to 630 pence each.