EasyJet has ordered Airbus aircraft with a list price of US$3.8 billion, betting that a fare slide is set to reverse after pushing the UK airline to record winter losses.
Europe’s second-biggest discount carrier converted purchase options for 30 A321neos, marking its first deal for the biggest version of Airbus’s upgraded narrow-body model, with deliveries due to start next year, it said on Tuesday.
EasyJet is buying new planes after projecting that revenue per seat, a measure of fares, will decline by a low single digit percentage this quarter after slumping almost 10 per cent in the fiscal first half through March 31. Bookings are running ahead of last year with 77 per cent of seats sold for the current three months, while competitors are reining in capacity, easing a supply glut.
“Demand to fly remains strong and reflects growing evidence that consumers are prioritizing expenditure on flights and holidays,” the easyJetchief executive Carolyn McCall said.
Adding the A321neos will boost the number of seats per flight, McCall said, improving unit costs by as much as 9 per cent versus the biggest planes easyJet currently operates and maximising growth at slot-constrained hubs such as London Gatwick.
The England-based carrier posted an adjusted pretax loss of £212 million (Dh1 billion) in the six month to the end of March, slightly worse than the £196m expected by analysts polled by Reuters. In the same period a year earlier, the company lost £21m before tax.
The pound’s slide following last summer’s Brexit vote wiped £82m from earnings, while the discounting drive ate up savings from lower fuel costs and came as demand remained subdued on some routes following a spate of terrorist attacks on European cities and tourist centres.
Company expectations for the full year are in line with the current market consensus, Ms McCall said. Analysts predict a pretax profit of about £372m for fiscal 2017, based on the average of 21 forecasts collected by Bloomberg.
EasyJet said it remains on track to source an air operating certificate located in mainland Europe this summer. The carrier may need the flying rights to carry on serving routes within the European Union once Britain exits the bloc.
* Agencies
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