Following a highly competitive fleet selection process, easyJet plc ("easyJet" or the "Company") announces that, subject to shareholder approval, it has entered into arrangements (the "New Framework Arrangements") with Airbus S.A.S. ("Airbus") to acquire 35 Current Generation A320 Aircraft for delivery between 2015 and 2017 under its existing agreement and 100 New Generation A320neo Aircraft for delivery from 2017 until 2022, under a new agreement. Under this new agreement, Airbus has also granted the Company the right, but not the obligation, to acquire up to 100 further New Generation A320neo Family Aircraft.
Key highlights of the transaction:
- Allows easyJet to continue to execute its successful strategy.
- New generation aircraft sourced at highly attractive prices and at a greater percentage discount to list price than the Company’s existing Airbus contract.
- Enhances easyJet’s cost advantage and mitigates against inflationary increases; the 180 seater New Generation A320neo Aircraft is expected to deliver a cost per seat saving of between 11% and 12%, compared to a 156 seater Current Generation A319 Aircraft.
- 85 of 135 ordered aircraft will be used to replace ageing aircraft as they leave the fleet and return to lessors, with the remaining aircraft used to continue easyJet’s existing strategy of capacity seat growth of between 3% to 5% per annum.
- Continues the high level of fleet flexibility provided by the current arrangements. Whilst the announcement today will deliver a fleet of 276 aircraft by 2022, as of today, the new arrangements also give easyJet the ability to manage the fleet size to between 165 and 298 aircraft in 2022 depending on economic conditions and opportunities available.
- Total expected fleet acquisition and overhaul expenditure as a percentage of revenue is expected to fall from 18% in the period 2005 to 2012, to 10% to 12% in the period 2018 to 2022.
Carolyn McCall, easyJet Chief Executive, commented:
"I am delighted that easyJet is able to announce its fleet plans today.
"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.
"These arrangements combined with easyJet’s cost advantage, leading network and compelling customer proposition mean that easyJet is uniquely positioned to be a structural winner in European aviation.
"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."
John Barton, easyJet Chairman, commented:
"Since joining the easyJet Board, I have spent a significant amount of time reviewing the rationale for ordering new aircraft and have been actively involved in the selection process, which I am sure has been robust and thorough. We have planned that the new fleet arrangements will be financed without recourse to shareholders and believe that the arrangements will enhance returns and dividends to shareholders.
"The new fleet arrangements will enable easyJet to continue its successful strategy of offering customers low fares to convenient airports and efficient and friendly service"
A circular is expected to be sent to shareholders later today giving details of the New Framework Arrangements and containing notice of a general meeting to be held on or around 11 July 2013 at which a resolution to approve the New Framework Arrangements will be proposed.
Notes to editors
1. The table below sets out the aircraft list price (being the sum of the airframe list price, engine option list price and the price of certain assumed specification change notices) against which the price concessions are made, based on the relevant price catalogue in January 2012 at the economic conditions at that date. easyJet has negotiated a very substantial discount from the list price, as set out below:
|Current Generation A320 Aircraft
|New Generation A320neo Aircraft*
*Applicable to both the firm aircraft orders and the purchase right aircraft.
2. Credit Suisse Securities (Europe) Limited is acting as sponsor and joint broker, and Nomura is acting as joint broker to the Company.
For further information:
|Investor and analyst:
||+44 (0) 7961 754 468
||+44 (0) 7961 879 763
||+44 (0) 7950 996 262
||+44 (0) 7860 794444
|Edward Simpkins, RLM Finsbury
||+44 (0) 20 7251 3801
+44 (0) 7947 740 551
There will be an analyst presentation at 9.30am BST on 18 June 2013 at Nomura, One Angel Lane, London, EC4R 3AB.
Capitalised terms in this release not otherwise defined shall have the meaning ascribed to them in the Circular.
Credit Suisse Securities (Europe) Limited, which is regulated in the United Kingdom by the Financial Conduct Authority, is acting for easyJet plc and no-one else in connection with the New Framework Arrangements and will not be responsible to anyone other than easyJet plc for providing the protections afforded to the clients of Credit Suisse Securities (Europe) Limited or for providing advice in relation to the New Framework Arrangements.
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