EasyJet has rejected a takeover approach from Hungarian rival Wizz Air and is to raise £1.2bn in a rights issue, as the low-cost carrier seeks to recover from the aviation industry’s worst crisis in decades.
The carrier said on Thursday that it had received an approach from an unnamed bidder for “a low premium and highly conditional all-share transaction”.
The approach was from Wizz Air, according to a person briefed on the matter. Wizz is a low-cost rival of easyJet that has pledged to use the pandemic to expand into western Europe.
EasyJet’s chief executive Johan Lundgren said the airline’s board had “no hesitation in rejecting this approach” and that the bidder was no longer considering an offer.
EasyJet and Wizz Air both declined to comment.
The takeover interest comes 18 months into an industry-wide crisis sparked by the pandemic and travel restrictions in place across Europe. EasyJet lost more than £2bn during the crisis, including suffering its first annual loss in its 25-year history in 2020.
EasyJet expects to fly less than two-thirds of its normal flight schedule for the rest of the year and Lundgren does not see a return to pre-pandemic levels of flying until 2023.
Raising more equity will give the airline a stronger balance sheet to help it withstand “potential prolonged market challenges”, including the risk that travel restrictions last into 2022, the company said.
The £1.2bn rights issue is priced at 410p per share, representing a deep discount of 36 per cent on the airline’s closing share price on Wednesday.
Shares in the airline, which fell 8 per cent to 723.78p in early trading on Thursday, have lost half their value over the past year.
Despite the challenges still facing airlines, Lundgren said easyJet was in a position to grab market share from legacy airlines which face a longer and more difficult path to recovery.
EasyJet, which competes with network carriers such as British Airways at hub airports, has already identified take-off and landing slots that have become available as other airlines retreat, Lundgren said.
“We believe within six to 12 months that there will be more slots that become available as part of the retrenchment of legacy airlines,” he said.
The carrier had access to £2.9bn of liquidity at the end of June, having raised more than £5.5bn since the start of the crisis, including a £400m share placing in June 2020.
Mark Simpson, an aviation analyst at Goodbody, said the new funding “clearly resolves all issues with regards its balance sheet”.
“We didn’t feel they had to raise more cash at this time,” he added.
Alongside the rights issue, easyJet said it had secured a new $400m revolving credit facility from its banks.
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2021-09-09 06:49:20Z
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