easyJet PLC (LSE:EZJ) agreed to buy 56 planes from Airbus SAS costing up to US$6.5bn in total as part of a “fleet refresh” that will replace older models and reduce future fuel costs.
The budget airline said in a statement Airbus will supply the aircraft between 2026 to 2029 to “secure certainty” and “maintain operational scale”, with the manufacturer’s delivery slots becoming increasingly scarce. No delivery slots would otherwise be available before 2027, easyJet said.
The announcement comes as the flight industry is battling revised schedules and cancelled flights due to a shortage of staff at airports. The post-Covid-19 bottleneck has hit passengers in Europe hard, with Gatwick and Amsterdam airports capping flights this summer.
Yesterday easyJet reported passenger occupancy for April and May was seven times higher than a year ago and forecast capacity to hit 87% of 2019 levels for the quarter ending 30 June.
This was less than the airline had guided for in its May interim results and it similarly cut its guidance for the fourth quarter to 90% of pre-Covid levels, down from 97% last month.
The airline is 86% booked for the current quarter but said prices are up 2%. Prices will increase 14% in the fourth quarter.
The latest arrangements with Airbus will involve the purchase and supply of 56 A320neo aircraft under an existing contract from 2013. These newer aircraft will replace older A319 and A320 models with bigger, quieter planes that have more capacity.
easyJet said it will also convert 18 of its A320neo planes between 2024 and 2027 to A321neo aircraft. CFM International SA will supply engines for the aircraft.
easyJet expects the new aircraft to deliver between 15% and 25% unit cost fuel efficiency improvements. It said the adoption of more efficient planes was “a core component of easyJet's path to net zero emissions”.
If the deal fell through, the airline said it would need to decrease its fleet size or source alternative more costly planes from the secondhand market.
Johan Lundgren, easyJet’s chief executive, said: “The proposed purchase firms up our orders with Airbus between FY 2026 and FY 2029, continuing the company’s fleet refresh, as the older A319s and A320s leave the airline and new A320 and A321 neo aircraft enter, providing benefits to easyJet through up gauging, cost efficiencies and sustainability enhancements.
“We believe this will support positive returns for the business and the delivery of our strategic objectives.”
Yesterday the budget airline said it expects to exceed previous projections for operating costs this quarter, but said the cost impact should be a one-off.
Shares were down 1.71% on early trades this morning.