Easyjet raises £305m in aircraft sale and leasebacks

The biggest carrier at Liverpool John Lennon Airport, easyJet has been hit badly by the COVID-19 crisis and is looking at full-year losses in excess of £800m. Tony McDonough reports

easyJet
An easyJet Airbus A320 at Liverpool Airport. Picture by Tim Anderson

 

Low cost airline easyJet says it has raised £305.7 in two separate deals to sale and leaseback nine aircraft as it looks to shore up its balance sheet.

In early October easyJet, the biggest carrier at Liverpool John Lennon Airport, said it expected full-year losses to top £800m, the first deficit in its 25-year history. Along with the rest of the aviation sector, the company has taken a big hit from the COVID-19 crisis.

The first sale and leaseback transaction was with Wilmington Trust SP Services (Dublin) for for five Airbus A320 family aircraft. The aircraft will generate cash sales proceeds of £146.5m.

They are leased for an average term of 117 months, creating lease obligations of £123.7m. The assets had a net book value at the time of transaction of around £116.2m.

In the the second transaction it has agreed a deal with Sky High 112 Leasing Company for the sale and leaseback of four Airbus A320 family aircraft. The aircraft will generate cash sales proceeds of £159.1m and are leased back for an average of 116 months.

This creates lease obligations of £108m. The assets had a net book value at the time of transaction of around £140.2m.

Over the terms of the nine leases the average incremental net annual headline cost reflected in easyJet’s income statement will be £15m, which is driven by increases in interest charges and depreciation.

Once these two transactions are completed, easyJet will retain 152 fully-owned and unencumbered aircraft, representing approximately 44% of the fleet. In a statement the company said: “easyJet will continue to review its liquidity position on a regular basis and will continue to assess further funding options, including those that exist in the robust sale and leaseback market.”

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