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EasyJet sheds 15% of shares in discounted rights issue

written by Sandy Milne | June 26, 2020
easyJet’s first A320neo delivery (Australian Aviation archives)

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.

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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.

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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.

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