easyJet has announced it will seek to raise £1.2 billion through a rights issue as it battles back from the Covid-19 pandemic.
The carrier also confirmed a new four-year senior secured revolving credit facility valued at up to $400 million.
easyJet said raising the additional equity will “protect and strengthen its long-term positioning in the European aviation sector”.
While offering a cushion against further losses from the pandemic, the low-cost airline said cash could also be used to take advantage of “long-term strategic and investment opportunities” expected to arise as the European aviation market recovers.
Johan Lundgren, chief executive of easyJet, said: “Since the onset of the pandemic, we have undertaken decisive and robust action to restructure our operations, addressed our cost base and secured our financial position, keeping our investment-grade credit rating.
“We have worked hard to maintain our customer friendly brand and network and been rewarded with immediate growth in demand when travel restrictions have been lifted.”
He added: “This capital increase will allow us to build on our fundamental operational strengths and network strategy for our customers as well as accelerate long-term value creation for our shareholders.”
In August, easyJet said UK domestic capacity was at 105 per cent of 2019 levels with a load factor of 82 per cent, while intra-EU capacity was at 81 per cent of 2019 levels with a load factors of 85 per cent.
easyJet also confirmed the board had recently received an unsolicited preliminary takeover approach.
This was carefully evaluated and then unanimously rejected, the airline said.
The potential bidder has since confirmed that it is no longer considering an offer for the company.
The indicative proposal took the form of a low premium and highly conditional all-share transaction which, in the view of the board, fundamentally undervalued the company.
In deciding to reject it, the board considered all relevant factors including the highly conditional nature of the proposal and the certainty and strategic opportunity that the rights issue presented to the company, a statement explained.