Wed, Jun 19, 2013 - Page 15 News List

EasyJet agrees to buy 135 Airbus jets at list price

Bloomberg

Airbus A320 airplanes from low-cost airline EasyJet are parked at Paris Charles de Gaulle Airport in Roissy, north of Paris, on April 29.

Photo: AFP

EasyJet PLC agreed to buy 135 Airbus SAS jets worth about US$13.22 billion at list price as Europe’s No. 2 low-cost carrier upgrades its fleet, risking an open confrontation with its founder, who has opposed the purchase.

EasyJet will take 35 current-generation A320s for delivery between 2015 and 2017, and 100 new-engine A320neos from 2017 to 2022, the Luton, England-based company said yesterday. The airline also has options to purchase 100 additional A320neos.

EasyJet is buying larger, more fuel-efficient airliners to replace old jets, helping boost seat capacity by as much as 5 percent annually. The agreement sets up a potential clash with founder and largest shareholder, Stelios Haji-Ioannou, who has been a vocal critic of a fleet upgrade and has demanded that management focus on profitability rather than growth.

“This is a great outcome for EasyJet, our shareholders and our passengers, and will ensure that EasyJet is able to continue its successful strategy of delivering profitable growth and returns to shareholders,” EasyJet chief executive officer Carolyn McCall said in a statement.

The deal, which is subject to shareholder approval, comes three months after larger rival Ryanair Holdings PLC agreed to buy 175 Boeing 737 jets worth US$15.6 billion at list price. Both Boeing Co and Airbus offered compelling new-generation jets with improved fuel efficiency, in a “highly competitive fleet selection process,” McCall said.

“Ultimately, Airbus offered us the best deal, and at a price with a greater discount to the list price than their landmark fleet purchase with EasyJet in 2002,” she said.

Airbus’s January list price for the current-generation A320s is US$91.5 million and US$100.2 million for the A320neo. Customers typically buy airliners at a discount. Stakeholders will be asked to approve the deal at a general meeting held at EasyJet’s Luton headquarters on July 11.

While ranked second to Ryanair among Europe’s low-cost airlines, EasyJet has dropped its early no-frills approach in favor of a model that offers ancillary services like lounge access and flexible tickets to draw corporate traffic. The move comes as network carriers including Deutsche Lufthansa AG and BA-parent IAG SA trim short-haul capacity. EasyJet attracted 10 million corporate travelers last year.

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