EasyJet Sells Airbus Planes to Survive the Coronavirus Crisis

Europe Airline

EasyJet is selling and leasing back nine Airbus planes to make its financial position better. However, it is raising $398.6m (£305.7m) in cash to help it survive the coronavirus crisis.

However, the airline is open to opt for this similar deal as in a statement it hints to investors. It said that it still had 152 fully-owned aircraft and calling the sale-and-leaseback market “robust.”

However, the airlines are undergoing this huge challenge of surviving the pandemic. As the demand for air travel is worldwide taking a hammering from the pandemic. But EasyJet has already raised more than £2.4bn in cash since COVID-19 hit.

Decreasing Passenger Numbers

It said in its most recent trading update that passenger numbers have dropped to almost half in the year to September 30. And EasyJet expects a full-year loss for the first time in its history.

This month, the International Air Transport Association (IATA) said there had been a decline in demand for air travel. And it expects that in 2020 passenger numbers will be down at least 70% as compared to 2019 for travel to/from/within Europe. IATA says that they are expecting only 340 million travelers in the region to fly in 2020 compared to close to 1.2 billion that flew last year.

However, due to the recurrence of the virus and government restrictions in Europe the airline industry is not hoping for a soon recovery. However, there was a surge in the number of EasyJet customers in August. But the passenger numbers dropped “significantly” in September.

“Customer demand was materially affected by changes in government travel guidance and quarantine rules. Customers are booking at a very late stage and visibility remains limited,” the airline said.

Cost Cutting

However, because of the crisis, the airline has cut its staff numbers by up to 30%. But it said it had avoided compulsory redundancies by “greatly increased seasonal and flexible working patterns.”

Its CEO Johan Lundgren said at the time, “Based on current travel restrictions we expect to fly 25% of planned capacity for Q1 2021. But we retain the flexibility to ramp up capacity quickly when we see demand return. And early booking levels for summer ’21 are in line with previous years.”

“Aviation continues to face the most severe threat in its history. And the UK Government urgently needs to step up with a bespoke package of measures to ensure airlines are able to support economic recovery when it comes.”

The sale-and-leaseback deals for Airbus 320 family aircraft have a term of almost 10 years,. And are with Wilmington Trust SP Services (Dublin) Limited and Sky High 112 Leasing Company Limited. They will cost EasyJet £15m in additional interest charges and depreciation over the term of the leases.

“Following high levels of demand from the operating lease marketplace, easyJet is pleased to confirm that it has engaged with a number of operating lessors to raise further liquidity, which will be used to further strengthen easyJet’s financial position,” the latest statement said.

“EasyJet will continue to review its liquidity position on a regular basis. And will continue to assess further funding options, including those that exist in the robust sale and leaseback market.”

EasyJet shares shot 1.4% higher as markets opened on Tuesday, before losing some ground to trade 0.6% higher at around 8:30 am in the UK.

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