easyJet buys 15 Airbus single-aisle planes

4th January 2011, Comments 0 comments

British no-frills airline easyJet on Tuesday said it had agreed to buy 15 Airbus A320 single-aisle planes worth 1.1 billion dollars (824 million euros) and secured an option to buy another 33.

"easyJet plc today announced that it has reached agreement with Airbus to exercise existing options over 15 Airbus A320 aircraft for delivery between 2012 and 2014 and to secure new options over a further 33 A320 aircraft."

It added that "whilst the total list price for the 15 new A320 aircraft should be approximately 1.1 billion dollars... easyJet has been granted substantial confidential price concessions" from European planemaker Airbus.

"We are pleased to announce this agreement with Airbus," easyJet chief executive Carolyn McCall said in the group's 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.

The aviation sector, and easyJet in particular, is enjoying a solid recovery following the financial crisis. The budget airline flying passengers across Europe unveiled soaring annual profits in late 2010 as well as plans for its first ever dividend.

Profit after tax jumped to 121.3 million pounds in the 12 months to September 30, up from 71.2 million pounds in 2008-09, as easyJet flew more passengers.

Profits would have been higher had the airline not been hit by costs of 27.3 million pounds linked to the Icelandic volcanic ash cloud disruption.

easyJet, which is 15 years old, also intends to pay its first dividend in January 2012 and drive revenue by attracting more business travellers.

McCall became chief executive in 2010 after months of boardroom turmoil at easyJet. She stepped down as head of the Guardian Media Group, replacing Andy Harrison.

Prior to her appointment, top easyJet executives had clashed with the airline's founder Stelios Haji-Ioannou over the carrier's growth strategy.

Stelios, who is also easyJet's biggest shareholder, had long called for a dividend, saying the airline's rapid growth strategy was flawed.

Under McCall, easyJet has settled a legal dispute with Stelios concerning use of the company's brand.

Stelios' company easyGroup IP Licensing (EGIP) had claimed that easyJet had breached the terms of a branding licence agreement, specifically by increasing its income from non-ticket revenues beyond an agreed 25 percent of total sales.

easyJet's right to the brand will last for 50 years, with a minimum commitment from the airline lasting 10 years, in return for an annual royalty payment to Stelios of 0.25 percent of the group's revenue.

© 2011 AFP

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