EasyJet gains on deferral of more Airbus plane orders

EasyJet Plc shares rose after the U.K. airline said it will defer the delivery of another 22 Airbus SE jets to conserve cash as the coronavirus crisis continues to depress travel demand.

Europe’s second-largest discount carrier will postpone the handovers, which were due over a three-year period starting in October 2021, to the 2027-2028 period. The timing of 15 additional aircraft deliveries within fiscal 2022-2024 will be shifted to match seasonal needs, EasyJet said in a statement on Tuesday.

The shares gained as much as 6.1%, and were up 4.9% at 9:26 a.m. in London.

With the new agreement, EasyJet will take no deliveries in fiscal 2021, helping it to rein in costs and ride out the pandemic after cutting jobs, closing bases and reporting its first annual loss in the year through September. The carrier had already deferred the delivery of 24 A320-family jets due over the next three years.

EasyJet may need to raise more cash to weather the pandemic and hunker down until traffic returns, Daniel Roeska, an analyst at Sanford C. Bernstein, wrote in a note to clients Dec. 20. The latest cause for alarm was triggered after a fast-spreading new strain of the virus forced a strict lockdown across England. Many countries closed their borders to U.K. travelers, roiling business for EasyJet during the busy holiday period.

The latest Covid-19 development could increase pressure on companies to find more liquidity and, if debt markets get tapped out, may prompt the need to raise further equity, Roeska wrote. EasyJet has raised over 3 billion pounds ($4 billion), through the sale and leaseback of some of its jets and a 419 million pound equity increase.

The carrier has also faced pressure from founder and No. 1 investor Stelios Haji-Ioannou to cancel the entire Airbus order for more than 100 aircraft.

Other airlines are also feeling the pinch from the virus mutation, which U.K. health officials have said is more contagious. IAG SA, the owner of British Airways, Delta Air Lines Inc. and Virgin Atlantic Airways Ltd. said Monday they would meet the demand of new York Governor Andrew Cuomo by testing all passengers on flights to the U.S.