British airline easyJet boosted its liquidity through a new five-year loan facility of $1.87 billion, backed by a partial guarantee from Britain, helping to ease concerns about its finances as the pandemic continues to stop travel.
Like most European airlines, cash-strapped easyJet had been hoping to be gearing up for a recovery this spring, but with Britain, its biggest market, back in lockdown, flying is expected to stay at minimal levels for several more months.
EasyJet said the new loan facility improved its debt maturity profile and it planned to repay and cancel the full drawn revolving credit facility of $500 million and term loans of about 400 million pounds ($540 million) in the first quarter.
To survive the pandemic so far, easyJet has axed 4,500 staff, tapped shareholders for cash, and sold dozens of its aircraft, and it did not rule out further action in its statement on Monday.
“easyJet will continue to review its liquidity position on a regular basis and will continue to assess further funding opportunities, should the need arise,” the airline said.
The new $1.87 billion loan was underwritten by a syndicate of banks and backed by guarantees provided by a scheme from Britain’s UK Export Finance, which includes some restrictions around future dividend payments.
Other companies hit by COVID-19 travel restrictions, including Britain’s Rolls-Royce and British Airways, owned by IAG, have also used UK Export Finance guarantees.
EasyJet said repaying its shorter term debt would “free up” a number of aircraft assets further strengthening its balance sheet.