easyJet buys Airbus jets as low-cost sector spurs recovery

4th January 2011, Comments 0 comments

British budget airline easyJet said Tuesday it will buy 15 Airbus A320 planes worth 1.1 billion dollars at list prices as the low-cost sector leads the aviation industry's recovery from a steep downturn.

The no-frills company, based at Luton airport north of London, said it would exercise options to buy the 15 aircraft for delivery between 2012 and 2014.

The carrier has also agreed an option to purchase another 33 of the medium-haul planes from European planemaker Airbus, a division of aerospace giant EADS.

The total list price for the 15 new A320 aircraft is about 1.1 billion dollars (824 million euros) -- but easyJet said it had won "substantial confidential price concessions."

"We are pleased to announce this agreement with Airbus," said Chief Executive Carolyn McCall said in a statement.

"It will help deliver easyJet's strategy of continued profitable growth ... whilst providing even more flight capacity for our passengers.

"A central feature of the agreement is the flexibility it gives easyJet to vary the growth rate in its capacity to reflect economic conditions and market opportunities," she added.

Low-cost airlines are currently flying high because travellers still want to save cash, despite the end of a global economic downturn that hammered demand for air travel.

"easyJet is preparing itself for the coming years with additional capacity with these new A320s (to) capitalise on the insatiable desire by customers to fly low-cost," said independent aviation analyst Saj Ahmad.

He added: "easyJet has made the first splash of 2011 ahead of its rivals and it now remains to be seen whether other competitors do the same and prepare to tap into the growing passenger market for low-cost travel."

John Strickland, of aviation consultancy JLS, agreed that low-cost carriers were best placed to benefit from the recovery.

"Today's news is really a confirmation of growth plans that easyJet has already announced but it certainly does show that the low-cost carriers are best adapted to benefit from tough economic times.

"They are able to offer the lower fares which more consumers are looking for and to generate profits from these, something that the higher cost legacy carriers are not easily able to do."

easyJet unveiled soaring annual profits in late 2010 and also announced plans for its first-ever dividend.

McCall became the group's chief executive in 2010 after months of boardroom turmoil at easyJet, stepping down as head of the Guardian Media Group to replace Andy Harrison.

© 2011 AFP

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