Jet2 raises € 483M with share issue to overcome the drop in travel
Jet2 has launched a new share issue raising £422 million (483 million euros) that will help it to cope with the impact of the Covid-19 pandemic. With nearly a year of travel restrictions taking a heavy toll, British airlines and travel companies plunged deeper into the crisis on Tuesday as the UK tightened its lockdown even further.
Jet2 said its latest fundraiser gives it enough liquidity to cope with what it expects to be an extended and unpredictable shutdown, adding that it maintains a cautious approach to the 2021 summer season.
The British travel industry, desperate for tourism to restart this summer, has said the UK government must urgently establish how it will lift the restrictions. Holidays are already banned under the lockdown, but now travellers entering the UK are required to have three Covid-19 tests, one before departure and two in the days after arrival, further shrinking demand for essential travel.
TUI, the world’s largest holiday company, has a more optimistic outlook. The company, which has been bailed out by the German government, said they plan to operate 80% of its 2019 capacity on Tuesday. Their chief executive said he was confident of the peak travel season, adding that its current financial resources would be "sufficient until the summer".
But tightening restrictions, including the introduction of hotels for quarantine, in addition to repeated warnings from British government ministers not to book holidays, leaves uncertainty for everyone.
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Financial analysts at Goodbody have opined on the Jet2 share sale that, "this capital increase should not come as a surprise, but it highlights concerns about the timing of recovery within the sector." They recall that competitors such as easyJet and British Airways parent IAG have already raised new funds from shareholders.
Jet2 said the new shares, priced at £11.80 (€13.53), representing a 9% discount, were equal to 20% of its share capital before the fundraiser. The company's shares fell 7.5% at 1130 GMT yesterday, having lost 37% in the past 12 months.