EasyJet secures £600 million loan from government amid coronavirus crisis
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One of the largest airlines in Europe has secured a bailout package from the U.K. government. As of Monday, EasyJet secured a £600 million loan from the Treasury and Bank of England’s emergency coronavirus fund.
The announcement came just after the founder of the low-cost giant Stelios Haji-Ioannou claimed that the airline would run out of money by August. Haji-Ioannou, whose family owns about 34% of EasyJet shares, wrote a letter, indicating that the carrier should cancel its £4.5 billion order for 107 “useless” Airbus aircraft.
After the announcement of the secured funding for EasyJet, a spokesperson for Haji-Iannou said that it didn’t change the underlying situation, according to The Guardian.
“Given the current cash burn — that probably pushes the insolvency boundary back from August to late-autumn, early winter”, Haji-Iannou’s spokesperson said.
The airline, like many others in the U.K. and around the world, has faced a collapse in demand among passengers in the light of the coronavirus pandemic. As a result, it’s completely suspended passenger operations and grounded its fleet throughout April and May.
According to the airline’s CEO Johan Lundgren, EasyJet has reached agreements with unions to furlough about 4,000 of its 9,000 U.K.-based pilots and crew.
“We remain absolutely focused on ensuring the long-term future of the airline, reducing costs and preserving jobs, to make sure EasyJet is in the best position to resume flying once the pandemic is over”, Lundgren said.
The U.K. aviation industry has asked the government to help it, but Chancellor Rishi Sunak said that he would consider companies on a case-by-case basis. EasyJet was able to secure its £600 million loan using the government’s coronavirus corporate financing facility.
Featured photo by Robin Utrecht/SOPA Images/LightRocket/Getty Images.
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