June 24, 2020 / 5:09 PM / 17 days ago

easyJet's loss widens as COVID-19 grounds plane fleet, to raise 450 million pounds

A general view shows a plane ready for departure, as EasyJet restarts its operations amid the coronavirus disease (COVID-19) outbreak, at Gatwick Airport, in Gatwick, Britain June 15, 2020. REUTERS/Peter Cziborra/Files

(Reuters) - Budget airline easyJet on Wednesday reported a bigger first-half loss as it took a hit from failed fuel hedging and sought to raise as much as 450 million pounds ($559.31 million) to glide through the global demand slump for air travel.

The airline last month said it would cut 4,500 jobs in a bid to shore up cash as it does not expect demand to recover until 2023 to pre-pandemic levels.

The company separately said it would sell not more than 59.5 million ordinary shares for proceeds of 400-450 million pounds. It also expects to have a cash balance of more than three billion pounds after the placing.

“We have been decisive in meeting the challenges of the pandemic by cutting costs, vastly reducing our capex while retaining our industry leading fleet flexibility,” Chief Executive Officer Johan Lundgren said.

EasyJet, whose planes started minimal flying last week, is planning to ramp-up activities in the next two months but strict UK quarantine rules, which it has legally challenged with rivals British Airways and Ryanair, are hampering its hopes.

The firm did not provide financial guidance on Wednesday, but said capacity is expected to build through the summer, with its fourth quarter at 30% of planned, pre-COVID-19 capacity. It also pointed to “encouraging” bookings for easyJet Holidays.

Pretax loss widened to 353 million pounds for the six months ended March 31 from 272 million pounds a year ago. Revenue rose 1.6%, though strikes in France, and storms Ciara and Dennis crimped sales.

The company also said it will begin a “progressive” employee consultation process this month as it looks at “potential changes” to its network.

($1 = 0.8046 pounds)

Reporting by Pushkala Aripaka in Bengaluru; Editing by Shailesh Kuber

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