EasyJet agrees to buy 135 Airbus jets

EasyJet agreed to buy 135 Airbus SAS jets worth about $13.22 billion at list price as the low-cost carrier upgrades its fleet, risking an open confrontation with its founder, who has opposed the purchase.

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 management focus on profitability rather than growth.

He opposes the airline’s strategy of increasing seat capacity.

“Yet another huge capital expenditure deal with the same supplier at ‘secret’ prices…. Naturally it raises more questions than answers,” he said.

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 today.

They 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 per cent annually.

“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,” chief executive officer Carolyn McCall said in a statement.

EasyJet rose 4 pence to 1,256 pence at 8.03 am in London. The stock has gained 64 per cent this year, valuing the airline at £4.9 billion.

The deal, which is subject to shareholder approval, comes three months after larger rival Ryanair agreed to buy 175 Boeing 737 jets worth $15.6 billion at list price.

Both Boeing and Airbus offered compelling new-generation jets with improved fuel efficiency, in a “highly competitive fleet selection process,” Ms 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 2013 list price for the current-generation A320s is $91.5 million and $100.2 million for the A320neo.

Bloomberg