easyJet A320 NEO Order
Big announcement from easyJet today -
Following a highly competitive fleet selection process, easyJet plc ("easyJet" or the "Company") announces that, subject to shareholder approval, it has entered into arrangements (the "New Framework Arrangements") with Airbus S.A.S. ("Airbus") to acquire 35 Current Generation A320 Aircraft for delivery between 2015 and 2017 under its existing agreement and 100 New Generation A320neo Aircraft for delivery from 2017 until 2022, under a new agreement. Under this new agreement, Airbus has also granted the Company the right, but not the obligation, to acquire up to 100 further New Generation A320neo Family Aircraft.
Key highlights of the transaction:
Allows easyJet to continue to execute its successful strategy. New generation aircraft sourced at highly attractive prices and at a greater percentage discount to list price than the Company’s existing Airbus contract. Enhances easyJet’s cost advantage and mitigates against inflationary increases; the 180 seater New Generation A320neo Aircraft is expected to deliver a cost per seat saving of between 11% and 12%, compared to a 156 seater Current Generation A319 Aircraft. 85 of 135 ordered aircraft will be used to replace ageing aircraft as they leave the fleet and return to lessors, with the remaining aircraft used to continue easyJet’s existing strategy of capacity seat growth of between 3% to 5% per annum. Continues the high level of fleet flexibility provided by the current arrangements. Whilst the announcement today will deliver a fleet of 276 aircraft by 2022, as of today, the new arrangements also give easyJet the ability to manage the fleet size to between 165 and 298 aircraft in 2022 depending on economic conditions and opportunities available. Total expected fleet acquisition and overhaul expenditure as a percentage of revenue is expected to fall from 18% in the period 2005 to 2012, to 10% to 12% in the period 2018 to 2022.