easyJet buys 15 Airbus single aisle planes

January 4, 2011 12:00 am

, LONDON, Jan 4, 2011 – Low-cost airline easyJet has bought 15 Airbus A320 single-aisle planes worth 1.1 billion dollars, the British company said on Tuesday, highlighting the aviation sector\’s recovery following the downturn.

The company added that it had agreed an option to purchase a further 33 of the medium-range planes from the European planemaker Airbus, which is a unit of aerospace giant EADS.

"easyJet plc today announced that it has reached agreement with Airbus to exercise existing options over 15 Airbus A320 aircraft for delivery between 2012 and 2014 and to secure new options over a further 33 A320 aircraft."

It said that although the total list price for the 15 new A320 aircraft was about 1.1 billion dollars (824 million euros), easyJet had won "substantial confidential price concessions".

Chief executive Carolyn McCall said in the group\’s statement: "We are pleased to announce this agreement with Airbus."

He said: "It will help deliver easyJet\’s strategy of continued profitable growth… whilst providing even more flight capacity for our passengers.

"A central feature of the agreement is the flexibility it gives easyJet to vary the growth rate in its capacity to reflect economic conditions and market opportunities," she added.

The aviation sector, and easyJet in particular, is enjoying a solid recovery following the financial crisis. The budget airline flying passengers across Europe unveiled soaring annual profits in late 2010 and also announced plans for its first ever dividend.

Last week meanwhile, China Eastern Airlines agreed to buy 50 A320 airliners with a list price of 3.22 billion dollars, in the latest sign of the Asian country\’s aviation boom.

Also in December, Shandong Airlines said it planned to buy 15 Boeing passenger planes worth up to 1.2 billion dollars.

China\’s rapidly expanding economy has seen the country\’s civil aviation sector grow at a blistering pace over the last few years, with few analysts seeing any likelihood of a slowdown.

Following Tuesday\’s announcement, easyJet\’s share price jumped 2.14 percent to 449.4 pence on London\’s wider FTSE 350 index. The index was up 1.72 percent, mirroring gains on the benchmark FTSE 100.

McCall became the group\’s chief executive in 2010 after months of boardroom turmoil at easyJet. She stepped down as head of the Guardian Media Group, replacing Andy Harrison.

Prior to her appointment, top easyJet executives had clashed with the airline\’s founder Stelios Haji-Ioannou.

Stelios, as the tycoon prefers to be known, and who is also easyJet\’s biggest shareholder, had long called for a dividend, saying the airline\’s rapid growth strategy was flawed.

McCall quickly agreed to his request and also settled a legal dispute with Stelios concerning use of the company\’s brand.

Stelios\’ company easyGroup IP Licensing (EGIP) had claimed that easyJet had breached the terms of a branding licence agreement, specifically by increasing its income from non-ticket revenues beyond an agreed 25 percent of total sales.

The company\’s right to the brand will last for 50 years, with a minimum commitment from the airline lasting 10 years, in return for an annual royalty payment to Stelios of 0.25 percent of the group\’s revenue.


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