EasyJet has secured a £600m loan from the Treasury and Bank of England under the emergency coronavirus fund scheme as the airline claimed it would run out of cash by the year-end regardless.
The announcement came as the airline’s founder and biggest shareholder, Sir Stelios Haji-Ioannou, demanded an emergency general meeting and called for the sacking of two directors.
Haji-Ioannou, who with his family owns just over a third of EasyJet shares also called for the termination of the £4.5 billion Airbus contract and management’s order for the 107 “useless” planes from Airbus
EasyJet is understood to be in talks with Airbus to review the £4.5 billion contract and reduce its ongoing spend.
The airline is also borrowing another £407 million from commercial creditors to ensure its liquidity, with its fleet grounded for at least April and May due to the pandemic.
The chief executive of easyJet, Johan Lundgren, said: “We remain absolutely focused on ensuring the long-term future of the airline, reducing our costs and preserving jobs, to make sure easyJet is in the best position to resume flying once the pandemic is over.”
Lundgren added: “Our current priority is to safeguard short-term liquidity … in the event of a prolonged grounding of the fleet.”
The airline has also reached agreements with unions to furlough UK-based pilots and crew. About 4,000 of 9,000 will be furloughed during April and May.
After news of the new financing, a spokesman for Haji-Iannaou said that it did not change the underlying situation, without cancellation of the Airbus order: “Given the current cash burn – that probably pushes the insolvency boundary back from August to late-autumn, early winter.”
Last week, as the relief packages were announced, the aviation sector had called for special government measures to help it survive but the Treasury has been unwilling to assist airlines until wealthy shareholders dig deep.
The chancellor, Rishi Sunak, said he would consider companies on a case-by-case basis, “only if all commercial avenues have been explored, including raising capital from existing investors”.
However, Haji-Ioannou, whose family received a near £60m share of £171m paid in dividends last month, said: “For the avoidance of doubt, I will not inject any fresh equity in easyJet whilst the Airbus liability is in place.”