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British airline EasyJet to buy 56 aircraft from Airbus for USD 6.5 Bn

Author : Pankaj Singh | Published Date : 2022-06-22 

British airline EasyJet to buy 56 aircraft from Airbus for USD 6.5 Bn

EasyJet plc is reportedly planning to buy about 56 Airbus SE’s A320neo air jets to honor its 2013 agreement with the European aircraft manufacturer, as well as upgrade its previous order to 18 new A321neo aircraft.

According to the British airline, the proposed order, which is currently awaiting the approval of stakeholders, secures its place in Airbus' order book through 2028.

EasyJet cited that the delivery of aircraft is expected to commence from the financial year 2026 to replace the older A319 and A320 planes with highly effective ones, emit lower pollutants and generate lesser noise, all while costing substantially cheaper than the list price which is approximately USD 6.5 billion thanks to certain price cuts allowed in the 2013 agreement.

Ever since the COVID-19 restrictions were relaxed, the demand for air travel has increased significantly with European air carriers struggling to meet the same. Meanwhile, the biggest impediment faced by Boeing Co. and Airbus in terms of rising production is the supply chain disruptions.

However, during the coronavirus outbreak, EasyJet’s finances had been severely strained, hence, it had reached an agreement with Airbus in December 2020 to postpone several aircraft deliveries under the 2013 agreement.

Stelios Haji-Ioannou, EasyJet's major shareholder, had opposed the Airbus investment at the height of the pandemic making it a source of dispute.

Although the British low-cost airline may have had to postpone more flights throughout the summer due to heavy traffic at airports, this didn't let that deter its desire to become a much greater player in the long run, according to AJ Bell Investment Director Russ Mould.

He added that the deal has a strategic rationale, but the British airline must first win over shareholders who may be upset about how badly its share price has performed this year considering that EasyJet shares were traded lower by 5% after reversing early gains on June 21’s afternoon deals.

Source credits:

https://money.usnews.com/investing/news/articles/2022-06-21/easyjet-agrees-to-buy-56-airbus-a320neo-jets

About Author

Pankaj Singh . .

Pankaj Singh

Endowed with a post graduate degree in management and finance, Pankaj Singh has been a part of the online content domain for quite a while. Having worked previously as a U.K. insurance underwriter for two years, he now writes articles for fractovia.org and other online portals. He can be contacted at- [email protected] | https://twitter.com/PankajSingh2605

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