British budget carrier easyJet has followed through on a bid to offload 59.54 million shares in order to raise much-needed capital.
While the transaction met stated liquidity goals, it represents a steep 5 per cent discount over the previous closing price of £7.40.
This followed an announcement made out the previous day, in which the airline had said that it was looking to raise £400-450 million.
Overall, just under 15 per cent of the airline’s current share capital was redistributed – marking a significant shift in governance for the British LCC.
EasyJet reported that it “consulted with a number of its major shareholders prior to the placing and has respected the principles of pre-emption through the allocation process”.
It adds that it is “pleased by the strong support it has received from existing shareholders and others” at a time when it has announced a pre-tax loss of £353 million in the first half of FY2020.
EasyJet has come under scrutiny from market analysts over the last few months, after dipping into a £600 million loan from a Treasury and Bank of England fund in March – shortly after issuing a £174 million dividend to shareholders.
However, others have been encouraged by the recent move, coupled with cost-cutting measures expected to stretch through to 2021.
Bernstein analyst Daniel Roeska said that he expects the airline to take about £1 billion of non-fuel costs out of the business in FY2021, “keeping unit cost constant and providing a runway for further improvements as the company pivots back to growth in FY22+”.
“Looking through the crisis and its aftermath, easyJet will have strengthened its position in key markets with a better cost position,” he added.
