easyJet shares saw an uptick of 0.2% to 444.5p in late morning trading on Tuesday after the budget travel group announced that it had entered into a conditional agreement with Airbus S.A.S. for Airbus to supply 56 A320 neo family aircraft for delivery between FY 2026 and FY 2029.
easyJet also proposed the conversion of 18 A320 neo aircraft scheduled for delivery between FY 2024 and FY 2027 to 18 A321 neo aircraft deliveries.
The group further noted it had entered into conditional arrangements with CFM International S.A. to ensure the commitments provided under the current engine supply engine agreement between easyJet and CFM would cover aircraft under the Airbus Amendment.
The move comes as part of easyJet’s air fleet renewal, as its 156 seat A319s and older A320s which provide 180 to 186 seats are removed from its airline roster to make room for its new 186 seat A320 and 235 seat A321 neo aircraft.
The new aircraft are set to provide up gauging, cost and sustainability improvements to the company, along with the delivery of strategic objectives to build enhanced shareholder returns.
The proposed purchase would complete the company’s 2013 agreement with Airbus, and secure the relatively scarce Airbus delivery slots between FY 2026 and FY 2029 to replace easyJet’s aging technology in its aircraft fleet for far lower than the $6.5 billion prices at 2018 as a result of price concessions tied to the 2013 agreement.
easyJet mentioned the purchase would be financed over several years through its own internal resources, cash flow, sale and leaseback transactions and debt. The group confirmed that it did not expect to ask shareholders to fund any aspect of the proposed purchase.
The fleet purchases are subject to shareholder agreement as a constituted class one transaction, with a circular scheduled to be sent out in due course providing further details and notice of the general meeting where the resolution will be discussed.
“The proposed purchase firms up our orders with Airbus between FY 2026 and FY 2029, continuing the company’s fleet refresh, as the older A319s and A320s leave the airline and new A320 and A321 neo aircraft enter, providing benefits to easyJet through up gauging, cost efficiencies and sustainability enhancements,” said easyJet CEO Johan Lundgren.
“We believe this will support positive returns for the business and the delivery of our strategic objectives.”