Shares in budget airline EasyJet (EZJ) gained over 4% to 789p after it managed to delay the purchase of more than two dozen aircraft in a move that will help its finances in 2021.
EasyJet has paid particular attention to trying to shore up its balance sheet in recent weeks, having loaded up on £3.1 billion of debt to survive the coronavirus pandemic - around £1.4 billion of which needs to be repaid in the next 14 months.
That comes after easyJet revealed in its full-year results to 30 September that it had swung to an annual loss for the first-time in its history as it reported a £1.3 billion pre-tax loss.
The firm is reportedly looking at ways to secure new funding, potentially including fresh bank loans and UK taxpayer support.
AIRBUS DELIVERIES PUSHED BACK TO 2022
In the latest move to help its finances, EasyJet has agreed to defer the purchase of more than two dozen aircraft from Airbus scheduled for delivery from its 2022 financial year onwards.
As a result the airline will take no deliveries in its 2021 financial year, eight in 2022, seven in 2023 and 18 in 2024, allowing it ‘to more closely match forecast seasonal requirements’.
All aircraft purchased by EasyJet under the terms of the original 2013 Airbus agreement are subject to a discount from list price, which EasyJet said remains unchanged.
Within the 2013 agreement a price escalation mechanism is used to reflect market inflation in labour and material costs, and as such the airline said the future aggregate cash price of the aircraft subject to deferrals will increase.
But crucially for the airline it said the changes will also result in a rephasing of the payment cash flows for the aircraft due to the later dates of delivery.
Johan Lundgren, EasyJet chief, pointed to the flexibility the agreement gives the airline to match customer demand and said, ‘This latest amendment to our longstanding agreement with Airbus reflects EasyJet’s significant fleet flexibility as well as the benefit of highly attractive aircraft pricing.
‘In this period of uncertainty, this flexibility is even more valuable, as it will enable us to quickly flex our fleet size in response to customer demand.’
