EasyJet orders 15 A320 Airbus aircraft

EasyJet confirms a firm order of 15 A320 Airbus aircraft, with options secured for a further 33 A320 Airbus aircraft to bring the total number of options for the no-frills carrier to 42 aircraft. The EasyJet Group have been tasked to improve margins and this new agreement will enable the company to execute this strategy with carefully targeted growth.

EasyJet founder Sir Stelios Haji-Ioannou said the group's announcement 'sounds like good news, at least in the short term'.

Under the Airbus Contract the aircraft basic price of each A320 aircraft, as at December 2010, was approximately $73m and therefore whilst the total list price for the 15 new A320 aircraft should be approximately $1.1bn, under the Airbus Contract easyJet has been granted substantial confidential price concessions by Airbus and the selected engine manufacturer - all prices above are subject to price escalation which reflects inflation. The conversion of the 20 A319 aircraft into A320 aircraft will increase the amount payable by easyJet for those aircraft, however the aggregate amount payable for an A320 aircraft is still substantially below the basic price for the A319 aircraft as described in the Circulars. There is no change in the other terms applicable to these aircraft.

The additional aircraft will be financed through a combination of cash, operating leases and debt. 

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Author: Mike King, Analyst