EasyJet to raise £90m to exploit turmoil among rivals

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The Independent Online

Easyjet, the no-frills airline, announced plans to raise more than £90m to exploit the turmoil afflicting rival carriers in the wake of the terrorist attacks.

Easyjet, the no-frills airline, announced plans to raise more than £90m to exploit the turmoil afflicting rival carriers in the wake of the terrorist attacks.

Stelios Haji-Ioannou, the company's chairman and founder, also revealed that he wanted to sell some of his holding to raise up to about £67m to support other ventures.

Reporting full-year results, easyJet said that while traditional airlines had suffered from the slump in demand and disruption caused by the hijackings, it saw a chance to expand faster than it had expected.

Mr Haji-Ioannou said: "I believe that easyJet is well placed to take advantage of the changing market conditions and the continued strong sentiment towards low-cost airlines. I am cautiously optimistic and believe that out of every crisis there is opportunity."

The carrier said that as rivals merged or reduced services, landing slots, aeroplanes and even cheaper pilots would become available. It wanted the financial muscle to take advantage, though it indicated that it was not considering corporate acquisitions or mergers.

"Consolidation will be painful, but it is necessary to produce an operating environment more capable of coping with a downturn in demand. Fourteen national airlines [in Europe] is about eight too many," Mr Haji-Ioannou said.

A placing and open offer, handled by CSFB and UBS Warburg, will market 26 million new easyJet shares to institutional investors. The brokers will also place between 13 million and 18.5 million existing shares on behalf of Mr Haji-Ioannou.

At yesterday's opening price, that would give Mr Haji-Ioannou between £47m and £67m to invest in his other businesses. He had been looking to float at least two of these, the easyEverything internet café chain and his car hire business, but the collapse in the new issues market had made this impossible.

The deal would see the Haji-Ioannou shareholding in easyJet diluted from about 70 per cent to around 60 per cent.

Started in 1995 and floated last year, the company was launched with a £5m loan from the Haji-Ioannou family, which made its fortune in shipping.

EasyJet reported pre-tax profit up 82 per cent to £40.1m, for the year ended 30 September, while passenger numbers over the period grew 26 per cent to 7.1 million.

Ray Webster, the airline's chief executive, said that prior to the flotation the company was doubling passengers every year, and it would now return to growth levels closer to that.

The company also announced that it had reached a long-term agreement over landing charges at its hub at Luton airport. The 20-year deal will see charges remain at around the current levels – £5.50 per passenger and 50p for baggage – that easyJet previously said was excessive.

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