Haji-Ioannou says EasyJet £600m government loan is ‘biggest scandal in British corporate history’

Date added: 8 April, 2020

EasyJet has secured a £600m loan from the Bank of England’s Covid Corporate Finance Facility, as the airline’s founder and biggest shareholder, Sir Stelios Haji-Ioannou, claimed it would run out of cash by the year end regardless. The loan scheme allows UK businesses to apply for loans at pre-crisis commercial rates.  EasyJet said it would also borrow another £407m from commercial creditors to ensure its liquidity. Its planes are now all grounded. Haji-Ioannou said even if the airline resumes flying fairly soon, hopes it would be solvent by August were probably “wildly optimistic” because it is wasting money on buying new planes. He said it is a scandal for EasyJet to be getting government funds, as if it cancelled the plane order, the loan would not be needed.  The £600m will be to pay Airbus. He said when international travel eventually restarts, the airline would “feel more like a startup trying to find a few profitable routes for a few aircraft”. EasyJet is meant to be buying order for 107 planes from Airbus, costing some £4.5bn, which it now cannot afford. EasyJet has now reached agreements with unions to furlough about 4,000 UK-based pilots and crew during April and May, out of a total of about 9,000.  Haji-Ioannou’s family received a near £60m share of £171m paid in dividends last month.  
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Easyjet £600m government loan described as ‘biggest scandal in British corporate history’

8 April 20208 April 2020

Easyjet founder Sir Stelios Haji-Ioannou has once again lashed out at the firm, saying the carrier’s receipt of £600m in loans from the government “could be the biggest scandal in British corporate history”.

The Greek-Cypriot businessman has pressured Easyjet’s board to scrap a £4.5bn order for 107 new planes from Airbus.

Haji-Ioannou believes cancelling the deal means there would be no need for the airline to draw on government funds to survive.

In a new statement, he said the deal “must be terminated for Easyjet to survive”.

He added that Easyjet’s board drew down £600m of government aid in order to pay Airbus.

“The reason (finance chief Andrew) Findlay wants to borrow this £600m from the UK taxpayer is to pay a Franco-German arms manufacturer £2bn,” he said.

“This is a misuse of UK taxpayers’ money”.

Haji-Ioannou is seeking to remove Findlay from the company. The founder said this is the only way to prevent the firm “writing cheques for billions” to the aerospace giant.

Haji-Ioannou, who is the airline’s largest shareholder, repeated his threat to sue bosses if “a penny of Easyjet’s monies goes to this non-UK supplier while Easyjet defaults on its other financial obligations in the future”.

Easyjet seeking to strip out supplier costs

In response, Easyjet said it was liaising with all suppliers, including Airbus, about removing expenditure.

“Easyjet has a strong asset position and balance sheet,” it said. “Our efforts to secure funding now are being carefully weighed against the long-term financial health of the airline.

“The [Bank of England’s] Covid Corporate Finance Facility gives access to funds at the sort of commercial rates which were available before the coronavirus crisis.

“The board fully supports Andrew Findlay and stands by its collective decision to access the CCFF which was made in the best interests of the company.

As a result of the coronavirus crisis, Easyjet has had to ground the entirety of its fleet due to the total lack of passenger demand for flights.

https://www.bmmagazine.co.uk/news/easyjet-600m-government-loan-described-as-biggest-scandal-in-british-corporate-history/ 

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What European countries are doing to rescue their airlines

By Saim Saeed (Politico.eu)

7th April 2020

The coronavirus pandemic has left many airlines wondering how long they’ll continue to exist.

Almost all of Europe’s carriers have grounded most of their planes and sent staff on leave. Many are looking for government aid to help pay their employees and remain solvent until the worst of the crisis is over — whenever that might be.

Here’s what different countries are doing to keep airlines from collapsing.

France

The government deferred ticket taxes from March to December. Aéroports de Paris, the company that operates the Charles de Gaulle and Orly airports, won’t charge airlines parking fees while planes are grounded. Airlines can also apply for partial unemployment benefits for furloughed staff out of a €45 billion aid package the government has made available to all businesses.

Air France is currently in talks with the government for a €4 billion loan guarantee, according to Reuters. State aid for the company is “absolutely necessary,” Air France CEO Anne Rigail told Le Figaro.

Germany

Berlin has allowed companies including airlines to apply for a tax deferral. The government is also mulling a takeover of Condor, the former Thomas Cook subsidiary acquired earlier this year by Polish carrier LOT. That transaction may not be completed, industry officials say.

Lufthansa is currently in talks with the government over a potential bailout worth billions, according to Reuters. The airline is also in talks with Belgium regarding a potential €300 million bailout for its struggling subsidiary, Brussels Airlines.

United Kingdom

The British government will pay up to 80% of the salaries of 30,000 British Airways employees through April and May, the company announced. Low-cost carrier easyJet got a £600 million loan from the Covid Corporate Financing Facility, a fund for British companies.

Chancellor Rishi Sunak said in a letter to the industry that airlines must exhaust other sources of liquidity before coming to the government for additional help.

The Netherlands

The Dutch government said it will not enforce EU passenger rights legislation that requires airlines to give cash refunds for passengers with canceled flights — an effort to preserve airline liquidity. The government is also in talks with national carrier KLM for a reported €2 billion loan guarantee.

However, the parliament has voted for a ticket tax to come into force from next year, despite lobbying from the airlines for a deferral.

Poland

State-owned LOT hasn’t asked for any public aid — something that might be problematic given the carrier already received a 400 million złoty (€89 million) bailout in 2012, which was later approved by the European Commission.

Instead, the government turned to the flag carrier to bring people back to the country after borders were closed on March 15. LOT flew about 55,000 people home on 380 paid-for flights, and the program is now completed. The government is now switching to using the carrier to make cargo flights.

Italy

The government announced a €500 million aid package that may lead to a re-nationalization of long-ailing Alitalia. The government had already provided €1.3 billion in emergency loans to the airline since it declared bankruptcy in 2017, all of which is under investigation by the European Commission for potentially breaching EU state aid rules. The Commission’s competition chief Margrethe Vestager said she was “neutral” on the re-nationalization “if it’s done at market prices.”

Spain

Madrid announced a €400 million package to help the travel industry. There is also a government program that will allow furloughed employees to claim unemployment benefits worth 70% of their original salary.

The Spanish Airline Association, which includes easyJet, Iberia and Air Europa, is pressing the government to do more — including deferring airport charges, taxes and a pause in enforcing refund policies — given Spain’s reliance on tourism.

Portugal

Portugal has a temporary layoff scheme which TAP Air Portugal, the national carrier, has applied to 90% of its workers. The carrier is also asking for tax payment delays, exemptions from airport taxes, and a state bailout.

The government has a 50% stake in the airline, which has prompted speculation of a renationalization potentially worth €200 million.

Finland

The government announced a €600 million loan guarantee for national carrier Finnair. “The state owns 55.8 percent of Finnair’s shares. The state is a responsible owner, and we are now facing a very serious situation both nationally and internationally, which is why the state must support Finnair,” the government said.

Norway

The government put up 6 billion kroner (€532 million) in loan guarantees for the aviation industry, half of which is for low-cost long-haul carrier Norwegian. The remaining sum is to be split among SAS Scandinavian, regional carrier Widerøe and other airlines.

Romania

The parliament last month unanimously passed a bill granting 200 million lei (€41 million) to get ailing flag carrier TAROM through the next six months. The Commission had already cleared an additional €36 million in emergency funds — unrelated to the coronavirus — in February.

Aitor Hernández-Morales and Jan Cienski contributed reporting.

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See also

EasyJet secures £600m coronavirus loan from UK Treasury and Bank

Airline also plans to borrow £400m from creditors to ensure liquidity during shutdown

By Gwyn Topham Transport correspondent (Guardian)

@GwynTopham
Mon 6 Apr 2020

EasyJet has secured a £600m loan from the Treasury and Bank of England’s emergency coronavirus fund, as the airline’s founder and biggest shareholder, Sir Stelios Haji-Ioannou, claimed it would run out of cash by the year end regardless.

The airline said it would also borrow another $500m (£407m) from commercial creditors to ensure its liquidity, with its fleet grounded for at least April and May due to the pandemic.

The announcement came as Haji-Ioannou, who with his family owns just over a third of easyJet shares, demanded an emergency general meeting and called for the sacking of two directors.

The Cypriot tycoon relaunched his attack on the airline’s management and its order for 107 “useless” planes from Airbus, saying his “main objective is to terminate the £4.5bn Airbus contract”.

In a statement issued before confirmation of easyJet’s government loan, Haji-Ioannou had claimed that even remaining solvent until August – based on financial analysis that assumed flying would be quickly embraced again by holidaymakers this summer – could prove “wildly optimistic”.

When international travel eventually restarts, he said, the airline would “feel more like a startup trying to find a few profitable routes for a few aircraft”.

After news of the new financing, a spokesman for Haji-Iannaou said that it did not change the underlying situation, without cancellation of the Airbus order: “Given the current cash burn – that probably pushes the insolvency boundary back from August to late-autumn, early winter.”

EasyJet is understood to be in talks with Airbus to review the £4.5bn contract and reduce its ongoing spend.

The chief executive of easyJet, Johan Lundgren, said: “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.”

He said the airline had now reached agreements with unions to furlough UK-based pilots and crew. About 4,000 of 9,000 will be furloughed during April and May.

Lundgren added: “Our current priority is to safeguard short-term liquidity … in the event of a prolonged grounding of the fleet.”

EasyJet has used the government’s Covid-19 corporate financing facility, which allows UK businesses to apply for loans at pre-crisis commercial rates.

The aviation sector had called for special government measures to help it survive, but the Treasury has been unwilling to assist airlines until wealthy shareholders dig deep.

The chancellor, Rishi Sunak, said he would consider companies on a case-by-case basis, “only if all commercial avenues have been explored, including raising capital from existing investors”.

If you have been affected or have any information, we’d like to hear from you. You can get in touch by filling in the form below, anonymously if you wish or contact us via WhatsApp by clicking here or adding the contact +44(0)7867825056. Only the Guardian can see your contributions and one of our journalists may contact you to discuss further.

However, Haji-Ioannou, whose family received a near £60m share of £171m paid in dividends last month, said: “For the avoidance of doubt, I will not inject any fresh equity in easyJet whilst the Airbus liability is in place.”

EasyJet is likely to explore ways of resisting his calls for an emergency meeting, which it said would be “an unhelpful distraction”.

=============

EasyJet secures £600m coronavirus loan from UK Treasury and Bank

Airline also plans to borrow £400m from creditors to ensure liquidity during shutdown

By Gwyn Topham Transport correspondent (Guardian)

@GwynTopham
Mon 6 Apr 2020

EasyJet has secured a £600m loan from the Treasury and Bank of England’s emergency coronavirus fund, as the airline’s founder and biggest shareholder, Sir Stelios Haji-Ioannou, claimed it would run out of cash by the year end regardless.

The airline said it would also borrow another $500m (£407m) from commercial creditors to ensure its liquidity, with its fleet grounded for at least April and May due to the pandemic.

The announcement came as Haji-Ioannou, who with his family owns just over a third of easyJet shares, demanded an emergency general meeting and called for the sacking of two directors.

The Cypriot tycoon relaunched his attack on the airline’s management and its order for 107 “useless” planes from Airbus, saying his “main objective is to terminate the £4.5bn Airbus contract”.

In a statement issued before confirmation of easyJet’s government loan, Haji-Ioannou had claimed that even remaining solvent until August – based on financial analysis that assumed flying would be quickly embraced again by holidaymakers this summer – could prove “wildly optimistic”.

When international travel eventually restarts, he said, the airline would “feel more like a startup trying to find a few profitable routes for a few aircraft”.

After news of the new financing, a spokesman for Haji-Iannaou said that it did not change the underlying situation, without cancellation of the Airbus order: “Given the current cash burn – that probably pushes the insolvency boundary back from August to late-autumn, early winter.”

EasyJet is understood to be in talks with Airbus to review the £4.5bn contract and reduce its ongoing spend.

The chief executive of easyJet, Johan Lundgren, said: “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.”

He said the airline had now reached agreements with unions to furlough UK-based pilots and crew. About 4,000 of 9,000 will be furloughed during April and May.

Lundgren added: “Our current priority is to safeguard short-term liquidity … in the event of a prolonged grounding of the fleet.”

EasyJet has used the government’s Covid-19 corporate financing facility, which allows UK businesses to apply for loans at pre-crisis commercial rates.

The aviation sector had called for special government measures to help it survive, but the Treasury has been unwilling to assist airlines until wealthy shareholders dig deep.

The chancellor, Rishi Sunak, said he would consider companies on a case-by-case basis, “only if all commercial avenues have been explored, including raising capital from existing investors”.

If you have been affected or have any information, we’d like to hear from you. You can get in touch by filling in the form below, anonymously if you wish or contact us via WhatsApp by clicking here or adding the contact +44(0)7867825056. Only the Guardian can see your contributions and one of our journalists may contact you to discuss further.

However, Haji-Ioannou, whose family received a near £60m share of £171m paid in dividends last month, said: “For the avoidance of doubt, I will not inject any fresh equity in easyJet whilst the Airbus liability is in place.”

EasyJet is likely to explore ways of resisting his calls for an emergency meeting, which it said would be “an unhelpful distraction”.

======

What European countries are doing to rescue their airlines

By Saim Saeed (Politico.eu)

7th April 2020

The coronavirus pandemic has left many airlines wondering how long they’ll continue to exist.

Almost all of Europe’s carriers have grounded most of their planes and sent staff on leave. Many are looking for government aid to help pay their employees and remain solvent until the worst of the crisis is over — whenever that might be.

Here’s what different countries are doing to keep airlines from collapsing.

France

The government deferred ticket taxes from March to December. Aéroports de Paris, the company that operates the Charles de Gaulle and Orly airports, won’t charge airlines parking fees while planes are grounded. Airlines can also apply for partial unemployment benefits for furloughed staff out of a €45 billion aid package the government has made available to all businesses.

Air France is currently in talks with the government for a €4 billion loan guarantee, according to Reuters. State aid for the company is “absolutely necessary,” Air France CEO Anne Rigail told Le Figaro.

Germany

Berlin has allowed companies including airlines to apply for a tax deferral. The government is also mulling a takeover of Condor, the former Thomas Cook subsidiary acquired earlier this year by Polish carrier LOT. That transaction may not be completed, industry officials say.

Lufthansa is currently in talks with the government over a potential bailout worth billions, according to Reuters. The airline is also in talks with Belgium regarding a potential €300 million bailout for its struggling subsidiary, Brussels Airlines.

United Kingdom

The British government will pay up to 80% of the salaries of 30,000 British Airways employees through April and May, the company announced. Low-cost carrier easyJet got a £600 million loan from the Covid Corporate Financing Facility, a fund for British companies.

Chancellor Rishi Sunak said in a letter to the industry that airlines must exhaust other sources of liquidity before coming to the government for additional help.

The Netherlands

The Dutch government said it will not enforce EU passenger rights legislation that requires airlines to give cash refunds for passengers with canceled flights — an effort to preserve airline liquidity. The government is also in talks with national carrier KLM for a reported €2 billion loan guarantee.

However, the parliament has voted for a ticket tax to come into force from next year, despite lobbying from the airlines for a deferral.

Poland

State-owned LOT hasn’t asked for any public aid — something that might be problematic given the carrier already received a 400 million złoty (€89 million) bailout in 2012, which was later approved by the European Commission.

Instead, the government turned to the flag carrier to bring people back to the country after borders were closed on March 15. LOT flew about 55,000 people home on 380 paid-for flights, and the program is now completed. The government is now switching to using the carrier to make cargo flights.

Italy

The government announced a €500 million aid package that may lead to a re-nationalization of long-ailing Alitalia. The government had already provided €1.3 billion in emergency loans to the airline since it declared bankruptcy in 2017, all of which is under investigation by the European Commission for potentially breaching EU state aid rules. The Commission’s competition chief Margrethe Vestager said she was “neutral” on the re-nationalization “if it’s done at market prices.”

Spain

Madrid announced a €400 million package to help the travel industry. There is also a government program that will allow furloughed employees to claim unemployment benefits worth 70% of their original salary.

The Spanish Airline Association, which includes easyJet, Iberia and Air Europa, is pressing the government to do more — including deferring airport charges, taxes and a pause in enforcing refund policies — given Spain’s reliance on tourism.

Portugal

Portugal has a temporary layoff scheme which TAP Air Portugal, the national carrier, has applied to 90% of its workers. The carrier is also asking for tax payment delays, exemptions from airport taxes, and a state bailout.

The government has a 50% stake in the airline, which has prompted speculation of a renationalization potentially worth €200 million.

Finland

The government announced a €600 million loan guarantee for national carrier Finnair. “The state owns 55.8 percent of Finnair’s shares. The state is a responsible owner, and we are now facing a very serious situation both nationally and internationally, which is why the state must support Finnair,” the government said.

Norway

The government put up 6 billion kroner (€532 million) in loan guarantees for the aviation industry, half of which is for low-cost long-haul carrier Norwegian. The remaining sum is to be split among SAS Scandinavian, regional carrier Widerøe and other airlines.

Romania

The parliament last month unanimously passed a bill granting 200 million lei (€41 million) to get ailing flag carrier TAROM through the next six months. The Commission had already cleared an additional €36 million in emergency funds — unrelated to the coronavirus — in February.

Aitor Hernández-Morales and Jan Cienski contributed reporting.

.

See also

EasyJet secures £600m coronavirus loan from UK Treasury and Bank

Airline also plans to borrow £400m from creditors to ensure liquidity during shutdown

By Gwyn Topham Transport correspondent (Guardian)

@GwynTopham
Mon 6 Apr 2020

EasyJet has secured a £600m loan from the Treasury and Bank of England’s emergency coronavirus fund, as the airline’s founder and biggest shareholder, Sir Stelios Haji-Ioannou, claimed it would run out of cash by the year end regardless.

The airline said it would also borrow another $500m (£407m) from commercial creditors to ensure its liquidity, with its fleet grounded for at least April and May due to the pandemic.

The announcement came as Haji-Ioannou, who with his family owns just over a third of easyJet shares, demanded an emergency general meeting and called for the sacking of two directors.

The Cypriot tycoon relaunched his attack on the airline’s management and its order for 107 “useless” planes from Airbus, saying his “main objective is to terminate the £4.5bn Airbus contract”.

In a statement issued before confirmation of easyJet’s government loan, Haji-Ioannou had claimed that even remaining solvent until August – based on financial analysis that assumed flying would be quickly embraced again by holidaymakers this summer – could prove “wildly optimistic”.

When international travel eventually restarts, he said, the airline would “feel more like a startup trying to find a few profitable routes for a few aircraft”.

After news of the new financing, a spokesman for Haji-Iannaou said that it did not change the underlying situation, without cancellation of the Airbus order: “Given the current cash burn – that probably pushes the insolvency boundary back from August to late-autumn, early winter.”

EasyJet is understood to be in talks with Airbus to review the £4.5bn contract and reduce its ongoing spend.

The chief executive of easyJet, Johan Lundgren, said: “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.”

He said the airline had now reached agreements with unions to furlough UK-based pilots and crew. About 4,000 of 9,000 will be furloughed during April and May.

Lundgren added: “Our current priority is to safeguard short-term liquidity … in the event of a prolonged grounding of the fleet.”

EasyJet has used the government’s Covid-19 corporate financing facility, which allows UK businesses to apply for loans at pre-crisis commercial rates.

The aviation sector had called for special government measures to help it survive, but the Treasury has been unwilling to assist airlines until wealthy shareholders dig deep.

The chancellor, Rishi Sunak, said he would consider companies on a case-by-case basis, “only if all commercial avenues have been explored, including raising capital from existing investors”.

If you have been affected or have any information, we’d like to hear from you. You can get in touch by filling in the form below, anonymously if you wish or contact us via WhatsApp by clicking here or adding the contact +44(0)7867825056. Only the Guardian can see your contributions and one of our journalists may contact you to discuss further.

However, Haji-Ioannou, whose family received a near £60m share of £171m paid in dividends last month, said: “For the avoidance of doubt, I will not inject any fresh equity in easyJet whilst the Airbus liability is in place.”

EasyJet is likely to explore ways of resisting his calls for an emergency meeting, which it said would be “an unhelpful distraction”.

https://www.theguardian.com/business/2020/apr/06/easyjet-secures-600m-coronavirus-loan-from-uk-treasury-and-bank

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Coronavirus: Don’t bail out airlines, say climate campaigners

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Posted: Wednesday, April 8th, 2020. Filed in General News, Recent News.