In a significant move signaling its recovery from the pandemic and laying out a long-term growth plan, UK's budget airline easyJet has announced an ambitious deal with Airbus to expand its fleet. The proposed deal, which is subject to shareholder approval, involves the purchase of up to 257 Airbus jets.
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The deal includes the purchase of an additional 157 Airbus A320neo jets, with an option to add 100 more. The airline is also converting 35 of its previously ordered A320neo into the larger A321neo as it looks to tap better economies of scale. This will allow easyJet to replace its remaining A319 aircraft, a smaller variant that's no longer popular with airlines. The fleet expansion will enable the company to sell more seats on routes from congested European airports like London Gatwick and Amsterdam, where there are few slots available to add more flights³. By 2034, easyJet's average number of seats per flight would rise to the low 200s from 179.
Despite heightened geopolitical instability and higher oil prices, easyJet's ambitions come at a time when the airline industry is witnessing a surge in demand for new planes. This year is shaping up to be among the hottest for large aircraft deals, intensifying the race among airlines for the last remaining production slots still available this decade. EasyJet's proposed deal with Airbus is seen as a strategic move to secure these rapidly selling out slots. The airline currently operates about 330 aircraft and will be retiring some older planes.
The airline also announced that it is targeting a pretax profit of more than 1 billion pounds in the medium term. This comes after forecasting an annual profit of 440 million to 460 million pounds ($542-$567 million) for the 12 months to the end of September. The ambitious growth plan based on bigger and more fuel-efficient planes underscores easyJet's confidence in its recovery and future prospects. However, more information is needed on how the planes would be financed.
