Jet2 raises $582 million to ride out pandemic travel slump

LONDON (Reuters) – British holiday company Jet2 has raised 422 million pounds ($581.6 million) through a new share issue to help it ride out the COVID-19 pandemic.

With almost a year of travel restrictions having taken a heavy toll, airlines and travel companies were plunged deeper into crisis on Tuesday when Britain tightened its rules.

Holidays are already banned under lockdown, but now travellers into the UK must have three COVID-19 tests – one before departure and two in the days after arrival.

Desperate for travel to have restarted by this summer, the industry has said the government must urgently set out how it will lift restrictions.

Jet2 said its latest fundrasing gives it sufficient liquidity to contend with what it expects to be an extended and unpredictable shutdown, adding that it is maintaining a cautious approach to the 2021 summer season.

Bigger competitor TUI, the world’s largest holiday group, was more optimistic outlook on Tuesday.

The company, which has been bailed out by the German government, plans to operate 80% of its 2019 capacity. Its chief executive said he was confident about the peak travel season, adding that its current financial resources would be “enough until summer”.

But tightening restrictions, including the introduction of quarantine hotels, plus repeated warnings from British government ministers not to book holidays, means uncertainty persists.

“This (capital) raise shouldn’t come as a surprise but it does highlight the concern on the timing of the recovery that exists within the sector,” Goodbody analysts said of the Jet2 share sale.

Competitors such as easyJet and British Airways parent IAG have already raised new funds from shareholders.

Jet2 said the new shares, at a price of 11.80 pounds – representing a 9% discount – were equivalent to 20% of its share capital before the fundraising. The company’s stock traded down 7.5% at 1,199 pence by 1130 GMT, having lost 37% over the past 12 months.

($1 = 0.7255 pounds)

(Reporting by Sarah Young and Paul Sandle; Editing by David Goodman)