EasyJet secures £600m Government loan as founder says it will ‘run out of money’
EasyJet said it has secured a £600 million Government loan as its founder warned it will “run out of money by around August”.
The funds are from the UK’s corporate financing facility to help firms during the coronavirus pandemic.
The airline also announced it will borrow a further 500m US dollars (£406 million) from commercial creditors as part of its “focus on maximising liquidity”.
The moves come as founder Sir Stelios Haji-Ioannou renewed calls to cancel a £4.5 billion order with Airbus and demanded that the company removes chief finance officer Andrew Findlay.
On Friday, easyJet rejected a request by Sir Stelios – who holds the biggest stake in the carrier – for a meeting of the company’s shareholders to decide whether to remove another director, Andreas Bierwirth.
Sir Stelios has now called for Mr Findlay to be sacked, as he said it would be “the best way to stop him writing billion-pound cheques-plus to Airbus every year”.
EasyJet has grounded all of its planes as demand for flights collapsed due to the coronavirus pandemic.
Sir Stelios has previously said the airline would not need Government loans if it terminates the contract with Airbus.
He also stressed he will not invest any more cash into the airline while the contract with the plane manufacturer is in place.
In a statement issued before easyJet announced it had secured additional funding, Sir Stelios said: “If this £4.5 billion liability to Airbus is preserved – and not cancelled – by the easyJet board then, I regret to report, easyJet will run out of money around August 2020, perhaps even earlier.”
He added: “If easyJet terminates the Airbus contract, then it does not need loans from the UK taxpayer and it has the best chance to survive and thrive in the future with some injection of additional equity provided for by the markets.”
EasyJet also announced it has reached an agreement with trade unions on furlough arrangements for its pilots and crew.
The airline’s chief executive 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.
“We are pleased that we have now reached agreement with both Unite and Balpa regarding furlough arrangements for UK-based easyJet pilots and crew.
“Our current priority is to safeguard short term liquidity… in order to increase our liquidity in the event of a prolonged grounding of the fleet.”