A £600m state lifeline for easyJet

EasyJet has secured a £600m loan from the Treasury and Bank of England’s emergency coronavirus fund.

The first major UK airline bailout has taken place, says Gwyn Topham in The Guardian. No-frills carrier easyJet has secured a £600m loan from the Treasury and Bank of England’s emergency coronavirus fund. It has also promised to borrow another £407m from commercial creditors. 

Nonetheless, easyJet’s founder Stelios Haji-Ioannou still thinks that it still could run out of cash in the near future, insisting that predictions that large-scale international flights could resume by June are “wildly optimistic”. He thinks that the loan simply “pushes the insolvency boundary back from August to late-autumn, early winter”.

Meanwhile, the battle between Haji-Ioannou and the easyJet board over a £4.5bn contract easyJet has signed with Airbus shows no sign of letting up, says Nikou Asgari in the Financial Times. Although Haji-Ioannou argues that the “long-term viability” of the low-cost airline rests on the Airbus order being cancelled, the board has refused to terminate the contract, arguing that they can change the delivery dates. Haji-Ioannou has now said he wants to oust easyJet’s chief financial officer, Andrew Findlay.

EasyJet is unlikely to be the only British airline needing state aid, says Oliver Gill in The Daily Telegraph. Virgin Atlantic has been discussing an emergency loan, but agreeing a bailout that “did not leave the British taxpayer at risk” has proven to be “problematic”. Not only has Virgin “struggled with profitability” but its decision to lease rather than own its planes means that there is “little security to put up against a state loan”.

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