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easyJet reveals $12 bn deal to buy 135 Airbus A320 planes

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(Globalpost/GlobalPost)

British low-cost airline easyJet announced on Tuesday a mega deal to buy 135 Airbus single-aisle A320 passenger planes, including 100 new generation neo aircraft for $11.9 billion (8.9 billion euros), after agreeing big discounts.

EasyJet, issuing a statement amid the Paris Air Show where European aircraft maker Airbus is battling for orders with US rival Boeing, added that it also had an option to buy an additional 100 A320neo planes.

The A320 series is the Airbus workhorse of the skies, popular with low-cost airlines and with companies operating on short to medium-distance routes.

The deal is likely to draw fresh opposition from easyJet founder and its biggest shareholder, Stelios Haji-Ioannou, who opposes the airline's strategy of increasing seat capacity.

"I am delighted that easyJet is able to announce its fleet plans today," said the airline's chief executive Carolyn McCall.

"All manufacturers competed hard for the easyJet business. Both Airbus and Boeing offered us new generation aircraft that met our requirements and offered greatly improved fuel efficiency.

"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 added in the statement.

EasyJet is to acquire 35 current generation A320 aircraft for delivery between 2015 and 2017 under an existing option agreement, and 100 new generation A320neo planes for delivery between 2017 and 2022 in a new deal.

"We are delighted our reliable aircraft have met easyJet's demanding criteria," Airbus Chief Operating Officer-Customers John Leahy said in a separate statement.

EasyJet said that 85 of the 135 ordered aircraft will be used to replace ageing passenger planes, with the remaining 50 used to build on easyJet's strategy of increasing its seat capacity of between three and five percent annually.

The company's network spans Europe and it flies also to a sprinkling of destinations in north Africa and the Middle East.

EasyJet shares rallied 1.12 percent to stand at 1,266 pence in early deals on London's benchmark FTSE 100 index, which was flat overall.

Tuesday's massive deal announcement is subject to approval by easyJet shareholders, although Haji-Ioannou does not have a large enough stake to alone scupper the company's intention to purchase new planes.

Haji-Ioannou, or Stelios as he is widely known, has long argued that easyJet should be returning money to shareholders via the payment of dividends, rather than increasing its seating capacity.

Amid the tensions, Mike Rake last month stepped down as easyJet chairman to be replaced by John Barton, who has also remained in his role as chairman of British clothing retailer Next.

Haji-Ioannou meanwhile last year launched the first pan-African no-frills carrier, Fastjet, while he and his family still own almost 37 percent of easyJet.

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http://www.globalpost.com/dispatch/news/afp/130618/easyjet-reveals-12-bn-deal-buy-135-airbus-a320-planes