EasyJet secures new five-year $1.87 billion loan with UK guarantee

LONDON (Reuters) – British airline easyJet has boosted liquidity with a new five-year, $1.87 billion loan facility, backed by a partial guarantee from Britain, helping to ease concerns over its finances as the pandemic continues to halt travel.

Like most European airlines, cash-strapped easyJet had hoped to prepare for a recovery this spring, but with Britain, its biggest market, back on lockdown, flights are expected to remain at low minimum levels for several more months.

EasyJet said the new loan facility has improved its debt maturity profile and it expects to repay and cancel the fully drawn revolving credit facility of $500 million and term loans of approximately 400 million pounds ($540 million) in the first quarter.

To survive the pandemic so far, easyJet has laid off 4,500 staff, appealed to shareholders for cash and sold dozens of its planes, and did not rule out further measures in its statement on Monday.

“easyJet will continue to regularly review its liquidity position and will continue to assess other funding opportunities, as the need arises,” the airline said.

The new $1.87 billion loan was underwritten by a syndicate of banks and backed by guarantees provided by a UK Export Finance scheme, which includes certain restrictions on future dividend payments.

Other companies hit by COVID-19 travel restrictions, including Britain’s Rolls-Royce and IAG-owned British Airways, have also used UK export finance guarantees.

EasyJet said paying down its shorter-term debt would “free up” a number of aviation assets further strengthening its balance sheet.

($1 = 0.7402 pounds)

(Reporting by Sarah Young; editing by Estelle Shirbon)

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