EasyJet today sold 23 of its aircraft to financiers including a Chinese state controlled bank for £608 million in a deal taking the total it has raised to shore up its finances in the face of the Covid-19 crisis to £2.4 billion.
Like all airlines, easyJet has been forced to go to extreme lengths to raise funds to cover refunds for cancelled flights and everyday overheads at a time of massively limited income.
As well as raising £600 million of UK government covid loans, it has negotiated extra overdraft facilities and bank loans and raised money by issuing new shares.
Today, it added to that tally by selling 23 aircraft at a price towards the upper end of the expected £500 million to £650 million range first announced in May.
The airline will now lease back the planes.
Among the companies buying them was the Chinese banking giant Bank of Communications, whose Bocomm Leasing arm stumped up £203 million for the sale and leaseback of five Airbus A321neo planes.
Chinese companies have been increasingly active in the European travel and aviation sector, taking big stakes in Thomas Cook prior to its collapse and the airline Norwegian.
Security sources have been concerned about the country's increasing influence in the industry and some blamed China was responsible for a major and sophisticated hack into easyJet's IT systems revealed in May. China denies conducting offensive cyber operations and easyJet has declined to say where the hack is suspected to have come from.
EasyJet has long prided itself on its conservative financial structure in that it owns its fleet. However, it has had to relax that stipulation to raise emergency cash during what is the worst crisis the industry has ever faced.
Last night's imposition of quarantine measures on France will add further pressure to its network, particularly its popular routes for summer sunseekers into Marseille, Nice and Bordeaux. The airline only resumed limited flights to France on June 15.
Following the conclusion of the sale and leaseback programme around 50% of easyJet's fleet remains "unencumbered" - not mortgaged out to finance companies.
EasyJet has now raised £2.4 billion comprising:
::£400 million from drawing down its revolving credit facility
::£600 million from Chancellor Rishi Sunak's Covid Corporate Financing Facility
::£400 million from two bank loans
::£608 million from the sale and leaseback deal on aircraft today
::£419 million from issuing new shares.
The company said it would continue to review its liquidity position on a regular basis and assess any further funding opportunities.
Europe has been concerned about China using the Covid crisis to snap up troubled EU companies and assets at knockdown prices.
The Chinese move for Norwegian in the Spring caused alarm in some political circles.
The European Commission has issued a White Paper aimed at blocking state-subsidised operators outbidding competitors for European assets. The paper, up for consultation until later next month, is clearly aimed at China.
The US has far more blatant screening tools for security threats which it has used extensively against Chinese companies.
Bank of Communications is part-owned by HSBC and the leasing deal was done through an Irish subsidiary.