easyJet selects Airbus as preferred supplier for 120 new aircraft
Zurich (ots)
easyJet plc ("easyJet"), Europe's leading low-cost
airline, today announced that it had selected Airbus as the preferred
supplier for 120 A319 aircraft, with options with price protection on
a further 120 A319s.easyJet has granted Airbus exclusivity for 45 days to agree documentation. The agreement in principle is subject to contract. The detailed terms are subject to confidentiality restrictions and any final agreement will be subject to shareholder approval.
Key points of the deal:
* Firm order for 120 Airbus A319 aircraft for delivery from
September 2003 over 5 years
* Options with price protection on a further 120 Airbus A319
aircraft until 2012
* Airbus A319 will be configured with 150 seats, with the
possibility of increasing to 156, compared to 149 on the Boeing
737-700
* Options for larger sized Airbus A320 and Airbus A321 at
pre-agreed pricesIt is expected that the final contract would provide easyJet with a number of significant financial benefits:
* easyJet estimates substantial savings, compared to buying
additional B737-700s today
* easyJet estimates the A319 would achieve an approximate 10%
improvement per aircraft over the existing Boeing 737 operating
cost base (measured per available seat kilometre)
* Airbus to provide extensive support so that the introduction of
the A319 to be no more expensive than the B737-700 in the first
two years
* Airbus backed maintenance program means cost not higher than
Boeing
* Airbus assistance reduces residual value risk on remaining 10
owned B737-300sIntroduction of new aircraft:
* A319s will be introduced initially via easyJet's Geneva base
from August 2003 operating under easyJet's Swiss air operator's
licence
* Eventually both the Airbus A319s and Boeing 737-700s will be
interchangeable on all easyJet routes maintaining the 'any
aircraft, any route' aspect of the easyJet business modelStelios Haji-Ioannou, easyJet Chairman, said:
"As easyJet's largest single shareholder, I was faced with the dilemma of either following the conventional wisdom in the marketplace in order to keep shareholders happy in the short term, or doing what's right for all shareholders in the long run. We, at the Board, decided to do what's right. We refused to overpay in order to improve the stock price in the short term. It should be an offence to mis-use that level of corporate resources.
"At the end of the day "low cost" companies remain "low cost" by not wasting money. Sticking to old-fashioned fads like "low cost airlines only fly Boeing" does not reduce costs. This order is big enough to be put to a vote by all shareholders. I will personally spend a lot of my time over the next couple of weeks along with the CEO and the Chairman-elect talking to our shareholders in order to explain the benefits of this deal. Having looked at several reference points on aircraft pricing including our own 44 Boeings, the offers Go Fly had received before the acquisition and the Ryanair deal, I am satisfied we have done the right thing by waiting. Having acquired Go Fly, one of the very few other potential buyers of significant numbers of aircraft, we have exploited the contestable market to its full potential. About four years ago, as a small airline we bought 15 B737-700s with no competition. Today, buying 120 aircraft in a competitive market, we can now purchase aircraft at approximately 30% per seat below the prices, adjusted for inflation, we achieved then.
"I have also followed the great success JetBlue have experienced with the Airbus product in the US. It offers an excellent, comfortable cabin for passengers, exceptional reliability and low fuel burn. The wider aisle also means faster boarding and deplaning, and therefore quick turnarounds. We also like the sizing of the A320 family, which allows us to graduate up to the 180 seat A320 and even 220 seat A321, if we choose to do so in the future."
Ray Webster, easyJet Chief Executive, said:
"After exhaustive research and several rounds of negotiation with both Airbus and Boeing, the Board is convinced that we have achieved a tremendous deal which will produce a step-change reduction in our cost base.
"Airbus has demonstrated an enthusiasm to do business with us which is unmatched in my experience.
"We believe that the overall deal which they have offered us, together with their willingness to support the costs of introducing a new aircraft type to our fleet far outweigh the costs of the complexity of running a dual fleet."
Noel Forgeard, President and Chief Executive of Airbus, said that he was immensely gratified with easyJet's decision:
"The A319 will do an outstanding job for easyJet, providing its passengers with more comfort, higher reliability and, with its unbeatable operating economics, the opportunity for lower fares. We are very excited at entering into a long term partnership with one of the world's most dynamic, low cost airlines."
There will be a meeting for analysts at 08.45 this morning at the offices of UBS Warburg at 1 Finsbury Avenue, London, EC2M 2PP
There will be a press conference at 10.30 this morning at the offices of UBS Warburg at 1 Finsbury Avenue, London, EC2M 2PP
There will be a conference call for fund managers and analysts this afternoon at 14.30 London time. For further details please contact Catherine Segrave at UBS Warburg on +44/20/75'68'14'58
Notes to editors
easyJet currently operates a fleet of 64 Boeing 737 aircraft (both -300 and -700 variants), operating on 83 routes to 35 airports and in the 12 months to end September easyJet and Go Fly carried a combined 16m passengers.
The A319 is a member of the A320 Family, which consists of the A318, A319, A320 and A321, the world's fastest selling single-aisle family.
A leading aircraft manufacturer with the most modern and comprehensive product line on the market, Airbus is a global company with design and manufacturing facilities in France, Germany, the UK, and Spain as well as subsidiaries in the US, China and Japan. Headquartered in Toulouse, France, Airbus is an EADS joint company with BAE SYSTEMS.
This announcement contains certain forward-looking statements with respect to the financial condition, results of operations, and business of easyJet plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this announcement should be construed as a profit forecast, and easyJet plc assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.
Contact:
easyJet plc
Toby Nicol, Corporate Communications Manager
Phone +44/15/82'52'53'39
Chris Walton, Finance Director
Phone +44/15/82'52'53'36
Derek Livingstone, Investor Relations Manager
Phone +44/15/82'52'54'62
Grandfield
Charles Cook/Gareth Penn
Phone +44/20/74'17'41'70
Airbus Corporate Communication
Phone +33/561/93'33'87