London — EasyJet rejects takeover offer and instead raises $ 1.7 billion from shareholders to strengthen its position in the European market struggling to recover from the COVID-19 pandemic, UK airlines Thursday Told to.
The low-cost carrier did not identify the suitor, but said the all-equity approach was fundamentally underestimating the business and potential bidders were no longer interested in trading.
A source familiar with the matter told Reuters that the approach came from budget rival Wizz Air, but declined to comment.
EasyJet CEO Johan Lundgren told reporters that the approach was “very conditional in nature and very uncertain in terms of deliverability.”
Airlines plan to strengthen their balance sheets if the COVID-19 recession continues, for example by purchasing to expand their presence at major airports in the European aviation market over the next few years. More landing slots mentioned in the expected recovery will be available.
“I think this is really a once-in-a-lifetime opportunity,” Lundgren said.
EasyJet aims to take market share when British Airways owners IAG and Air France-KLM and other legacy carriers withdraw short-haul flights.
However, it faces fierce competition with Europe’s largest airlines, low-cost carriers Ryanair and Wizz Air. Both recovered faster than easyJet during the summer.
IAG will also set up a new subsidiary at London’s Gatwick Airport to enhance its low-cost offers with the goal of becoming more competitive with easyJet.
EasyJet said it expects its capacity to reach about 57% of pre-pandemic levels from July to September. Ryanair flew about 75% of normal passengers in August, and Wiz flew more than 85% that month.
EasyJet shares, which traded at around 1,550p before the pandemic hit in early 2020, fell 14% in early trading to 680p, reflecting the significant discounts offered to rights issues. became.
They have regained some rationale for a 10% drop at 712p at 0815 GMT, with a market capitalization of £ 3.33 billion ($ 4.59 billion). IAG shares fell 3.3%, the largest decline on the FTSE-100, while Wizz fell 2.6%.
Under the rights issue, shareholders will be able to buy 31 shares for 410p for every 47 existing shares, according to easyJet.
This issue is undertaken by BNP Paribas, Credit Suisse, Goldman Sachs, Santander and Societe Generale.
EasyJet also announced a newly committed $ 400 million secured revolving credit line.
($ 1 = £ 0.7264)