EasyJet secures £1.4bn state-backed bailout to help survive the coronavirus pandemic

EasyJet has got a £1.4 billion 5-year state-backed loan to help it survive Covid. The loan has been underwritten by a group of banks; it is part-guaranteed by UK Export Finance, a government agency.  Easyjet will not be able to pay dividends for the term of the loan under conditions it has agreed. The loan has been secured against aircraft, and it means the airline can reduce its £369m overdraft and deal with its other loan of £400m. This is the second British airline to get a loan part guaranteed by the UK government, as British Airways got theirs a few days earlier.  Easyjet’s boss said the airline has “now secured more than £4.5billion in liquidity since the beginning of the pandemic.”  The airlines are all hoping by the second half of 2021, enough people will be vaccinated that they will start flying – in their droves – once again. If there is not such a recovery, some airlines may not survive. 
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EasyJet secures £1.4bn state-backed bailout to help survive the coronavirus pandemic

Five-year loan underwritten by group of banks and part financed by UK Export Finance

By MATT OLIVER FOR THE DAILY MAIL

8 January 2021

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.

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.

https://www.thisismoney.co.uk/money/markets/article-9127941/EasyJet-secures-1-4bn-state-backed-bailout.html?ns_mchannel=rss&ns_campaign=1490&ito=1490

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See earlier:

British Airways to get a £2 billion loan, backed by UK Export Finance. It had a £300 million loan earlier

British Airways has been asking for financial help, to get it through the Covid pandemic. Now it has had a new £2 billion funding boost, through a state-backed loan. Its parent company, IAG, has secured commitments for a 5-year loan, underwritten by a syndicate of banks. It is being partially guaranteed by state-backed credit agency UK Export Finance (UKEF) and details are being finalised. The loan has covenants, including perhaps restrictions on dividend payments by the airline to IAG. The money will keep BA going until, it hopes, effective Covid vaccines during 2021 will enable air travel to resume, in high numbers. IAG said it “continues to have strong liquidity with cash and undrawn facilities of €8 billion as at November 30, excluding the UKEF facility.” But it is also looking at other sources of money.  BA had previously received £300 million over a year from a Bank of England loan programme for the UK’s biggest companies. It also claimed support from the taxpayer-funded furlough scheme.  IAG made a pre-tax loss of £6.2 billion pre-tax loss for the first 9 months of 2020, on revenues down 66% to £6.5 billion. BA is also cutting a quarter of its workforce – so losing 12,000 staff.

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