easyJet

A long recovery path ahead

  • Sectors : Airlines & Other Transport
  • Companies : easyJet

Ratings and price correct at time of issue.

  • easyJet

    Closing Price: 657p

  • RATING 20/06/18

  • PREVIOUS RATING 12/12/17

    OUTPERFORM

DAVY VIEW

easyJet’s 15% equity raise (gross proceeds of £419m) along with sale and leaseback transactions will see liquidity proceeds exceeding £3bn and should give its capital structure some breathing space. Whether this is the appropriate leverage will depend on cash burn (£3bn on a full grounding over nine months), restructuring (stretch target of flat cost per seat ex-fuel in FY2021 versus FY2019) and recovery (30% capacity in peak summer Q4). While no guidance is given, with operations likely to resume on a slow and gradual basis, we assume reported losses before tax of £770m and £35m in FY2020 and FY2021 respectively before profit returns in FY2022 (£390m). We retain our ‘Neutral’ rating with a price target of £7.

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Jul 2 2020, 07:00 IST/BST

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