EasyJet Firms Order For 56 Airbus A320neo And Upsizes 18 To A321neo
British low-cost airline easyJet has today firmed an order for 56 additional A320neo aircraft as part of its fleet renewal activities. The airline secured options on these aircraft back in 2013, but has moved to firm the order to secure its delivery slots between 2026 and 2029. The airline noted,
“Given constraints on Airbus delivery slots, should the Proposed Purchase not proceed, easyJet would not have a secure supply of aircraft between FY 2026 and FY 2029 and would therefore need to either decrease its fleet size or source alternative new generation aircraft with higher ownership costs.”
It further said that, should it not secure the delivery slots from 2026 onwards, it would be forced to employ older technology aircraft from the secondary market. This, it said, would expose it to higher fuel costs and carbon taxes, giving it a competitive disadvantage.
The order is worth some $6.5 billion at list price. However, easyJet has noted that it has secured a significant reduction on this price as part of its original 2013 deal.
As well as the 56 A320neo, easyJet also upsized an order for 18 jets to the larger A321neo variant. The airline presently flies a total fleet of 327 Airbus jets, 58 of which are the neo variants. Just 15 of these are the largest A321neo version.
With these new planes secured, easyJet will be seeking to phase out its older technology aircraft. In particular, this represents a significant increase in passenger-carrying capacity, given that 93 of its present planes are the smallest 156-seat A319.
Shareholder approval pending
As with any major purchase, easyJet’s shareholders will have the final say on this order going ahead. The airline has engineered its announcement to put the shareholders’ minds at rest, noting that it intends to finance this purchase through internal resources, cash flow, sale and leaseback transactions and debt. It says,
“While the board will regularly review optimal sources of financing, there is currently no expectation that shareholders will be asked to fund any aspect of the proposed purchase.”
It seems easyJet is anticipating some pushback from its investors, and it could be right. Less than a year has passed since the airline secured a £1.2 billion ($1.5 billion) rights issue to pay down pandemic-related debt and make investments for the future. During the crisis, the airline raised some £5.5 billion ($6.7 billion), £420 million of which was from its shareholders.
The announcement of today’s deal could open old wounds for the airline. Back in the early days of the pandemic, easyJet founder and major shareholder Sir Stelios Haji-Ioannou demanded the order with Airbus be either deferred or renegotiated to avoid future problems at the airline. Later, he attempted to oust several directors at the airline, a move that ultimately failed.
Alongside the potential for Sir Stelios to reignite his fury over the Airbus order is the rather unfortunate lens from which the public is viewing the airline right now. easyJet has canceled around 40 flights per day for the summer in a bid to more effectively manage the surging travel demand seen in Europe right now, but that comes too late for many hundreds of passengers who were affected by the capacity meltdown over the recent late-May public holiday.
