EasyJet bets on market upturn, upgrades Airbus order
BRITISH low-cost carrier EasyJet has upgraded an order for 30 Airbus SE narrow-body aircraft to the biggest A321 variant in a bet that fare declines are set to ease after pushing it to record winter losses.
The switch marks EasyJet’s first deal for the new plane, which has 49 more seats than the A320 model, previously the largest in its fleet. Deliveries start next summer, the carrier said yesterday, adding that some other orders would be deferred and older jets retired early to limit the impact on capacity.
EasyJet is buying new planes after projecting that revenue per seat, a measure of fares, will drop by only a low single-digit percentage this quarter after slumping almost 10 percent in the fiscal first half to March 31. That pushed the carrier’s adjusted pretax loss to £212 million (R3.63 billion), resulting in its shares declining as much as 6.8 percent.
Some 77 percent of seats have already been sold for the current three months, with 55 percent booked for the fourth quarter, more than at the same time last year, chief executive Carolyn McCall said.
Adding the A321 is a “purposeful and strategic” move that will help EasyJet to exploit opportunities presented by a bankruptcy filing at Alitalia, the break up of Air Berlin and growth curbs at Norwegian Air Shuttle and IAG’s Vueling arm, McCall said in an interview.
The bigger planes will also shave about 9 percent from unit costs and maximise growth at major hubs where operating slots are scarce during peak hours, she said.
The switch leaves EasyJet with orders for 70 A320neos, with the first due for delivery next month, as well as options to buy 100 more Airbus narrow-bodies. There are no plans right now to convert more existing contracts to A321s or to dip into the options, which are available for 10 years, according to McCall.
Wider fleet adjustments mean that EasyJet will have 304 planes by the end of fiscal 2019, 38 more than it had as of March 31 but eight fewer than previously projected. – Bloomberg